General Motors Co. (NYSE: GM) and Ford Motor Co. (NYSE: F) announced last year their intention to end production in Australia. On Monday, Toyota Motor Corp. (NYSE: TM) said that it would join the exodus and stop making cars and engines in the country by the end of 2017. Thousands of jobs will be lost, directly or indirectly, and no global automakers will remain in the country. High production costs, competition and a strong currency there are getting the blame.
Source: Wikimedia Commons
“This is obviously devastating news for everyone involved with Toyota,” said Australian Prime Minister Tony Abbott. “It’s devastating for me and for the government.”
A spokesman for the Australia Council of Trade Unions (ACTU) said that the government has “done absolutely nothing to keep Toyota in this country. … The loss of the automotive manufacturing industry in Australia will have far reaching consequences around the country and throughout the economy.”
Toyota holds about one-fifth of the market in Australia and has the top-selling brand there. It is also Australia’s largest automotive exporter. But overall vehicle production in the nation already has dropped from more than 400,000 units in 2004 to around 200,000 in 2012. Global automakers instead have built new factories and increased capacity in places with a more attractive production base, such as Indonesia.
The Australian government had been subsidizing auto manufacturing in an attempt to buoy the industry and it tens of thousands of jobs, including areas such as auto parts. The Australian arm of GM received 1.8 billion Australian dollars ($1.6 billion) in federal government assistance over the past 11 years. But apparently it was not enough to keep the major industry afloat there, as the government tries to manage the economic slowdown. Back in September, the conservative government vowed to cut taxes and ease red tape for businesses, but said it would eschew “corporate welfare” to prop up ailing companies.
So, for the first time in peacetime since at least 1925, Australia is left with no consumer carmaker.
Sponsored: Want to Retire Early? Here’s a Great First Step
Want retirement to come a few years earlier than you’d planned? Or are you ready to retire now, but want an extra set of eyes on your finances?
Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.
Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
