Is GM's Holden facing the axe?

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IOL mot dec9 Holden Commodore

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Days could be numbered: The Holden Commodore (previously sold in SA as the Chevrolet Lumina) is a rear-wheel drive sedan developed in Australia by Holden.

Australia’s government has ordered the country’s GM division Holden to reveal whether it plans to quit the country, after the carmaker said it needed long-term government assistance to keep its Australian plants operating.

Holden chairman and managing director Mike Devereux said earlier on Tuesday that no decision had been made on whether the GM division would remain in Australia.

But Deputy Prime Minister Warren Truss said Devereux's comments only added to the uncertainty and fired off a letter to him asking for immediate clarification of the company's plans.

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

“And now it has not ruled our abandoning manufacturing in this country.”

Treasurer Joe Hockey also demanded Holden be upfront about its plans.

“Because if I was running a business and I was committed to that business in Australia, I wouldn't be saying that I haven't made any decision about its future. Either you're here or you're not,” Hockey said.

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 a blow to the nation's car industry after Ford announced in May that it would stop making vehicles at its unprofitable Australian factories in 2016, with the loss of 1200 jobs, bringing an end to an era that began in 1925.

HELP NEEDED

Devereux stressed that no decision had been made, but that assistance was needed to keep operations going.

“We need a public/private partnership over the long term to be able to be relatively competitive and to have GM be able to do what it wants to do which is build where we sell,” he said.

“I wouldn't speculate on what contribution will be needed ... because I can't tell you what future currency rates will be or what free trade agreements we will sign,” he added.

Devereux said that Holden, which makes the iconic Commodore, had made a submission to the government, the details of which were confidential.

But he 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 $33 billion to the Australian economy,” he said. “That's 18 times the assistance we receive.”

Should Holden, which has a 10.3 percent market share in Australia, cease manufacturing it would leave only Toyota Australia - which employs more than 4000 workers - making cars in the country after Ford's exit.

Mitsubishi closed its Adelaide plant five years ago, 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 to the government in March. -Sapa-AFP


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