According to Bloomberg,
Seven months after Ford announced it would pull out, GM said yesterday its Holden unit will cease production in 2017. That prompted the last holdout, Toyota Motor Corp. (7203), to say the move will place “unprecedented pressure” on parts makers and questioned the merits of remaining in the country. A stronger local currency and falling import tariffs have driven down sales of Australian-made cars by almost half since 2007.
The hollowing out of the nation’s auto industry has implications beyond the three companies as carmakers have about 150 suppliers that employ an estimated 42,000 people. The departure of Australia’s biggest carmaker also adds pressure on Prime Minister Tony Abbott, who’s facing rising unemployment and deteriorating consumer sentiment three months after winning an election by pledging to restore confidence in the economy.
“The Australian dollar has claimed an iconic brand of cars,” said Martin Whetton, an interest-rate strategist at Nomura Holdings Inc. in Sydney. “The announcement will be a major blow to confidence in the run-up to Christmas, as job losses will exacerbate an already heightened sense of insecurity.”