GM to end Australia car production
General Motors (GM) is to stop making cars and engines in Australia by the end of 2017, with nearly 2,900 jobs lost, because of high production costs and competition.
The decision could spell the end of car manufacturing in Australia as the industry will be too small for supporting businesses such as parts-makers to remain economic.
Toyota announced it is reassessing its future in Australia and a union said 50,000 jobs in the car industry are in jeopardy.
GM's subsidiary Holden once dominated Australian car sales, but lost market share to imported cars.
Ford, once Holden's major rival in Australia, announced in May that it was ending production in the country in 2016. Toyota is the only other car manufacturer in Australia.
Australia had four car manufacturers before Mitsubishi shut its doors in 2008.
GM's announcement has been anticipated for months. The Australian government has been under mounting pressure to offer increased subsidies to the Detroit-based company to keep it manufacturing in Australia for the sake of the car parts industry.
GM's chief executive Dan Akerson blamed the sustained strength of the Australian dollar, high costs of production, and a small population.
Holden, which has manufactured cars in Australia for 65 years, will become a sales company, he said.
The announcement was made on the same day that GM revealed that Mr Akerson will be replaced by Mary Barra on January 15.
GM's Australia chairman Mike Devereux said GM cars rebadged as Holdens would continue to be sold and serviced in Australia after 2017.
GM is currently selling the Australia-built Chevrolet SS in the United States. The 6.2-litre V8 car is called the Holden VF Commodore in Australia.
"Building cars in this country is just not sustainable," Mr Devereux said.
Australian industry minister Ian Macfarlane said he was "floored" when Mr Devereux phoned and broke the news.
Mr Macfarlane said he was disappointed that GM had made its decision before an inquiry completed an analysis of government support of the car industry.
Holden has received £1 billion in federal government assistance in the past 11 years.
Toyota said GM's decision put its own ability to make Australian cars under "unprecedented pressure".
"We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia," Toyota said in a statement.
The Australian Manufacturing Workers' Union (AMWU), which represents most of the car industry's workforce, predicted that Toyota would also shut its Australian plant.
"Toyota have told me that they won't be able to survive in Australia because of the lack of volume in the component industry," AMWU vehicle division secretary Dave Smith said.
"This will spell the end of 50,000 automotive jobs."
Acting prime minister Warren Truss said the number of cars manufactured in Australia had declined by one third in only six years.
Makers in Australia produced about 178,000 cars last year, according to the International Organisation of Motor Vehicle Manufacturers.
Mr Truss said: "While Australians say they want locally manufactured cars ... the reality is they don't buy them."