UPDATE 1-GM says no decision on Australian exit, govt demands answers

Tue Dec 10, 2013 1:38am EST

* GM Holden chief says more govt assistance required

* Acting PM demands immediate clarification on plans

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, provoking an angry reaction from the Australian government which demanded that the U.S. automaker clarify its plans.

Speaking before a government-appointed panel looking into the future of Australia's beleaguered car industry, Mike Devereux, head of GM's Holden unit, also said GM would need more assistance from the Australian government to survive long term.

"We need a public-private partnership over the long term to be relatively competitive," he said in closely watched comments amid debate that GM could follow other automakers in pulling the plug on Australian manufacturing.

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 exited in 2008 and Ford Motor Co announced in May it would close its two Australian auto plants in October 2016.

There are widespread concerns that any exit by GM Holden will be followed by Toyota Motor Co, causing a collapse of the entire domestic industry, supporting more than 40,000 workers and 150 supplier companies.

Acting Prime Minister Warren Truss criticised the lack of commitment from Holden.

"Your comments merely confirmed that a decision to end manufacturing in Australia remains a live option and has not been ruled out," he said in a letter to Devereux that was released to the media.

"It is the Australian government's view that GM Holden must immediately provide a clear explanation of its future intentions and explain what its plans are for its Australian manufacturing operations."

Truss said the Federal government had provided more than A$1 billion in support to the industry in recent years and had committed to a further A$1 billion between 2015-2020. It has ruled out increasing subsidies.

Truss is acting prime minister while Tony Abbott is visiting South Africa to attend the memorial for Nelson Mandela.

Devereux said it cost $3,750 more to build a car in Australia than at GM's other plants in Asia, 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.

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