GM's Holden to exit Australia as early as 2016: reports

SYDNEY Thu Dec 5, 2013 6:33pm EST

A cyclist rides past a General Motors (GM) Holden storage facility in Melbourne June 2, 2009. REUTERS/Mick Tsikas

A cyclist rides past a General Motors (GM) Holden storage facility in Melbourne June 2, 2009.

Credit: Reuters/Mick Tsikas

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SYDNEY (Reuters) - General Motors Co (GM.N) has decided to pull out of vehicle production in Australia as early as 2016, local media reported on Friday, in what would be a major blow to the struggling industry.

Citing unnamed senior government sources, the Australian Broadcasting Corp said an announcement on the decision to close was supposed to have been made this week but had been put off until early next year.

A GM spokesman in Detroit declined to comment on the reports.

Both Industry Minister Ian Macfarlane and shadow minister Kim Carr said they understood no decision had been made.

Australia's auto industry has been under pressure for years as high costs, a strong local dollar, weak exports and tough international competition take a toll.

It has been propped up by billions of dollars in government support, which has become less certain since Prime Minister Tony Abbott's conservative coalition won power in September.

Both Abbott and union officials called on Holden to inform the public of its plans.

"The message we are getting from Holden is they are in two minds and I would like them to clarify what their position is," Abbott told local radio.

"There is not going to be any extra money over and above the generous support taxpayers have been giving for some time," he added

The Australian automotive industry employs more than 50,000 people and supports 200,000 other manufacturing jobs. Any exit by Holden is likely to affect the economies of scale at Toyota Motor Corp (7203.T).

"This is an eco-system. If one goes, it's only a matter of time before the whole lot goes," Carr told reporters on Friday.

Holden, which claims a 10 percent share of the Australian market, posted a A$153 million loss in 2012. It produced around 95,000 vehicles including its top selling Commodore and Cruze, with exports making up less than 14,000.

In May, Ford Motor Co (F.N) will shut its two Australian auto plants in October 2016, following the exit of Mitsubishi Motors (7211.T) in 2008.

Holden, which traces its roots in Australia to a saddle maker in 1856, makes vehicles at its Elizabeth plant in South Australia and engines in Port Melbourne, Victoria, employing almost 4,000 people.

In a move likely to increase pressure on the domestic auto industry, Australia on Thursday signed a free trade deal with major auto producer South Korea.

Even before the FTA, vehicles were Australia's second-largest import from South Korea, worth more than A$2 billion last year.

Australia has annual sales of around 1.1 million new vehicles, but sales of locally manufactured vehicles have fallen to less than a quarter of that, from almost 389,000 in 2005.

(Reporting by Lincoln Feast; Additional reporting by Ben Klayman in Detroit; Editing by Richard Pullin)

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