GM Holden announced it will cut 500 jobs or 18% of its workforce in Australia, due to the dollar strength which made the automaker unable to compete with foreign car makers.
“We are experiencing a structural shift in the market,” said Holden chairman and managing director, Mike Devereux.
Devereux added that the automaker will also cut production of the Cruze to 335 units, almost a fifth, to face declining demand. Since the Cruze was introduced in 2009 its price has been reduced by A$2,500 ($2,600) to be able to compete with foreign rivals. It’s been more than two years since the Australian dollar has traded above parity with its US counterpart and has appreciated against the Japanese yen, which means automakers in Australia cannot compete with car makers in Japan either.
GM Holden, Toyota Australia and Ford Australia have all cut jobs in the region due to decreased exports and sales blaming the strong Australian dollar and the global downturn. The Australian government said it will keep offering subsidies to automakers to keep the auto industry afloat and protect the remaining jobs after Mitsubishi closed its plants here in 2008.
“The fact of the matter is that we, Holden, are the only company making small cars in Australia and the cost of making those cars has continued to rise compared with our foreign competitors,” Devereux said. “It’s crucial to the long-term future of Holden that we align our business with local demand.”