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Published on : Dec 11, 2013

General Motors (GM) subsidiary Holden has decided to exit manufacturing operations in Australia-a 65-year journey that will culminate with closure by the end of 2017. This will also mean a job loss for the 2,900 people currently working at the carmaker’s Australian facility.

According to the firm, operations are being wound up in view of the strong position of the Australian dollar that has consistently performed well against the US dollar and the small, fragmented Australian auto market that makes sustenance difficult. To make matters worse, manufacturing costs have also charted an upward graph in the past few years. 

Even as it shuts down Australian manufacturing operations, the automaker will continue to operate its other two business arms-auto parts distribution and sales. 

GM chief executive Dan Akerson said in a public statement that the automotive industry is facaing a “storm of negative influences,” forcing Holden to down its shutters

This exit by Holden was anticipated given that automakers have been witnessing a rather rough patch in the country despite being pumped with government funds in the form of subsidies. However, experts have debated whether the government’s decision to fund automakers is likely to turn things for the better. 

In the first week of December, Australian Prime Minister Tony Abbot had declard that taxpayer assistance would be discontinued. At the same time, the pressure on Holden from the Australian government asking it to provide clarity on its future plans in the country had been mounting. Certain industry insiders opine that this push from the government could have prompted Holden to take the exit route.

Earlier, in May 2013, American auto giant Ford had also announced that it would cease production in Australia by the end of 2016. With two major players exiting, Japanese auto manufacturer Toyota remains the sole entity still manufacturing cars in Australia post 2017. The Australian Manufacturing Workers Union anticipates the strong possibility of an exit by Toyota as well.

This has put nearly 50,000 jobs in the Australian auto industry on the line.