(Reuters) – Toyota Motor Corp (7203.T) said on Monday it would stop making cars and engines in Australia by the end of 2017 in what would mark the end of an era for a once-vibrant auto production base and the loss of thousands of direct and indirect jobs.
Toyota’s decision follows the planned exits of General Motors (GM.N) and Ford Motor (F.N) announced last year and would leave no global automaker remaining in Australia as high costs and a strong currency make it an unattractive production base.
We did everything that we could to transform our business, but the reality is that there are too many factors beyond our control that make it unviable to build cars in Australia, Toyota Australia President Max Yasuda said in a statement.
About 2,500 jobs will be affected when the plant stops building cars in 2017, the company said.
Toyota’s exit from Australia after more than half a century there deals a further blow to Prime Minister Tony Abbott’s conservative government, which is seeking to manage a slowdown in the $1.5 trillion economy as a decade-long mining investment boom slows.
A pullout by Toyota had been widely feared because of the blow to the parts supply base from the flight of GM and Ford.
It’s a huge moment for industry in Australia, Industry Minister Ian Macfarlane told reporters in Canberra after Toyota’s announcement.
Toyota have made no requests to us other than express their frustration with the difficulty they were having with the industrial relations process, he said, when asked whether Toyota had sought financial assistance or other forms of aid.
Australia’s car industry includes about 150 companies working in sectors from components to tooling, design and engineering, with more than 45,000 people employed directly in the car and parts-making sectors, according to government data.
Vehicle production in Australia has nearly halved in the past decade to just above 200,000 in 2012 from more than 400,000 in 2004. Sales of locally made vehicles have suffered in recent years as a stronger Australian dollar makes imported cars more competitive.
In contrast, global automakers have been building new factories and ramping up capacity in countries like Indonesia, where a burgeoning middle class and lower costs make it an increasingly attractive production base.
(Reporting by Sonali Paul in MELBOURNE, Maggie Luyueyang in SYDNEY and Chang-Ran Kim in TOKYO; Editing by Matt Driskill)
