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Oz gov: 'Holden in or out?'

2013-12-10 11:31

END OF OZ HOLDEN? Australian government has demanded GM reveal if it is planning to close shop or not in the country. Image: AFP

SYDNEY, Australia - The Australian government has ordered struggling automaker GM Holden to reveal whether it plans to quit the country.

The automaker had said it needed long-term government assistance to keep its Australian plants operating.

Holden chairman and managing director Mike Devereux said on Tuesday (Dec 10 2013) that no decision had been made on whether the firm, a unit of US giant General Motors, would remain in Australia.


Deputy prime minister Warren Truss said Devereux's comments only added to the uncertainty and fired off a letter seeking immediate clarification of the company's plans.

Truss told parliament: "The statements today include no clear commitment to stay in this country and yet it was only two years ago when Holden had said it had achieved sustainable profitability in Australia.

"Now it has not ruled our abandoning manufacturing in this country."

The Wall Street Journal, citing people close to the plans, reported on Monday that GM intended to shut down its two Australian factories while also slashing output in South Korea as part of a plan to weed out its unprofitable operations.

The move would be another blow to the nation's auto industry. Ford said in May 2013 that it would stop making vehicles at its unprofitable Australian factories in 2016, with the loss of 1200 jobs. The automaker has been assembling vehicles in Australia since 1925.

Devereux stressed that no decision had been made but that assistance was needed: "We need a public/private partnership over the long term to be relatively competitive, to have GM do what it wants to do which is build where we sell.

"I wouldn't speculate on what contribution would be needed... I can't tell you what future currency rates will be or what free-trade agreements we will sign."

Devereux said Holden had made a confidential submission to the government but told a Productivity Commission hearing into the automotive sector that the benefits Holden delivered to the economy far outweighed the cost of any subsidies.

"The economic benefit of us making things is equivalent to R310-billion to the Australian economy," he said. "That's 18 times the assistance we receive."

Should Holden, which has a 10.3% market share in Australia, cease manufacturing it would leave only Toyota - which employs more than 4000 people - making cars in the country (after Ford goes).

Mitsubishi closed its Adelaide plant five years earlier and the government must now decide the level of its assistance to the industry on which some 50 000 jobs rely.

The productivity commission is due to report in March 2014.

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