Australia's car industry is at risk after GM has announced ceasing car production by 2017

50 000 jobs at risk as GM decides to quit car production in Australia

General Motors (GM) has announced it will stop making cars and engines in Australia by the end of 2017 due to high production costs and competition.

As the decision will directly affect 2,900 works employed in GM’s facilities in Australia, further 50,000 jobs could be in jeopardy, according to the Australian Manufacturing Workers Union (AMWU).

GM’s withdrawal from Australia, the AMWU believes, will have a detrimental effect on the rest of Australia’s car industry as the market will be too small for supporting businesses such as parts-makers to remain economic.

GM’s announcement is the last in the string of bad news coming from Australia’s car-manufacturing sectors. Toyota said earlier it was reassessing its future on the continent while Ford announced ceasing production in the country by 2016. The first of Australia’s four car manufacturers to have left already in 2008 was Mitsubishi.

GM’s decision is coming after it was revealed its Australian subsidiary Holden, once a dominant player in Australia’s car market, has lost its position to imported cars.

"Building cars in this country is just not sustainable," said GM's Australia chairman Mike Devereux. His colleague, GM's chief executive Dan Akerson, blamed the sustained strength of the Australian dollar, high costs of production, and Australia's small population for the problem.

GM said Holden, having been manufacturing vehicles in Australia for 65 years, will now become a sales company as GM’s cars, renamed as Holdens will still be sold in Australia after 2017.

GM is currently selling the Australia-built Chevrolet SS in the United States, which is called the Holden VF Commodore in Australia.

Over the past 11 years, Holden has received £1bn in federal government assistance to keep the production going. The government has expressed disappointment with GM’s decision as it has been reviewing its subsidy policy due to a mounting pressure to assist GM to maintain the production in the country for the sake of the car parts industry.

Toyota said GM's decision will have a direct effect on its own ability to make Australian cars.

"We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia," Toyota said in a statement.

"Toyota have told me that they won't be able to survive in Australia because of the lack of volume in the component industry," AMWU vehicle division secretary Dave Smith said.

"This will spell the end of 50,000 automotive jobs."

Makers in Australia produced about 178,000 cars last year, according to the International Organisation of Motor Vehicle Manufacturers.

Mr Truss said: "While Australians say they want locally manufactured cars ... the reality is they don't buy them."

GM’s announcement was made on the same day that GM revealed that CEO Akerson will be replaced by Mary Barra on 15 January.

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