DOLLAR SURGE: The local car-making operations of GM, Ford Motor Co and Toyota Motor Corp have been hit by an Australian dollar that surged almost 50 per cent against the US dollar from 2009 to 2012, making exports uncompetitive and boosting the appeal of imports. — Reuters photo
MELBOURNE: General Motors Co (GM)’s Holden unit has made the case for continued government assistance in Australia as it considers whether to keep making cars in the nation.
Annual subsidies of about A$150 million (US$136 million) a year result in A$33 billion of economic activity, managing director Mike Devereux told the government’s Productivity Commission in Melbourne today. Detroit-based GM hasn’t made a decision on its future in Australia beyond 2016, he said.
“That is a very good return for the economy of this country,” Devereux said. “There is a level of assistance that needs to be there for GM to make a business case viable to be able to make cars here.”
The local car-making operations of GM, Ford Motor Co and Toyota Motor Corp have been hit by an Australian dollar that surged almost 50 per cent against the US dollar from 2009 to 2012, making exports uncompetitive and boosting the appeal of imports. Facing a deteriorating budget position, Prime Minister Tony Abbott’s coalition government plans to cut A$500 million from subsidies to the car industry by 2015.
Australia’s Acting Prime Minister Warren Truss has written to GM asking for an “immediate statement clarifying their intentions,” he told parliament in Canberra yesterday.
Holden continues to make the case to GM that it wants to make two types of vehicles in Australia, Devereux said, amid reports by the Australian Broadcasting Corp and the Wall Street Journal that the unit will cease production in the country as soon as 2016. It costs the company A$3,750 more to produce a car in Australia than at other plants in Asia, Devereux said.
GM is free from US taxpayer ownership after the Treasury Department sold off its remaining stake in the nation’s largest automaker, almost five years after first receiving government aid. Bailouts from the George W Bush and Barack Obama administrations helped GM avoid liquidation and reorganize in a 2009 bankruptcy that has given new life to the company. — Bloomberg