GM Holden says no decision on Australian exit

MELBOURNE Mon Dec 9, 2013 7:47pm EST

MELBOURNE Dec 10 (Reuters) - General Motors Co said on Tuesday it has made no decision on whether to stop making cars in Australia after 2016, but added that it would need assistance from the Australian government to survive long term.

The auto industry in Australia has depended on government support for years due to soaring costs, a strong Australian dollar, cheap imports and weak exports.

Japan's Mitsubishi Motors Corp was the first to pull the plug on manufacturing in Australia, exiting in 2008. Ford Motor Co announced in May it would close its two Australian auto plants in October 2016.

"We need a public-private partnership over the long term to be relatively competitive," Mike Devereux, head of GM's Holden unit, told a government-appointed panel looking into the future of the car industry.

His appearance before the panel was being closely watched as there had been speculation he might announce a decision Holden's future.

It costs $3,750 more to build a car in Australia than at GM's other plants in Asia, he said, and that gap would have to shrink with the help of government assistance and further cost-cutting in order to keep the operations open.

He praised the U.S. government's decision to bail out car makers during the global financial crisis, saying that had spurred the industry's resurgence, and said as the No.2 car brand in Australia, Holden wanted to continue making cars here.

"The budgetary cost of losing this industry would dwarf the cost of keeping it," he said.

Devereux declined to say how much assistance the company had sought from the government, but the Labor opposition's industry spokesman Kim Carr has said Holden would keep its plants open if it received A$150 million ($136 million) a year.

Even with government support, Devereux said Holden would look to cut the local components used in its flagship Commodore cars beyond 2016 to around 25 to 30 percent from 50 percent of the vehicle currently.

Holden, which claims a 10 percent share of the Australian market, posted a A$153 million loss in 2012. It employs nearly 4,000 people.