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Marton Pettendy11 Feb 2014
NEWS

Official: Aussie car industry to die by 2017

Toyota confirms it will follow Ford and Holden by ceasing local manufacturing within four years

Toyota has confirmed it will quit manufacturing in Australia by 2017, marking the end of the local car-making industry.

Toyota Motor Corporation President and CEO Akio Toyoda joined Toyota Australia President and CEO Max Yasuda (pictured) in announcing the news to workers this afternoon, confirming his company had been unsuccessful in its bid to build the next-generation Camry in Australia from 2018.

About 2500 direct jobs will be lost from Toyota’s Altona manufacturing plant in Victoria, which currently produces the Camry, Camry Hybrid and Aurion sedans, as well as four-cylinder engines.

Just like Holden in December and Ford last May, Toyota today confirmed it will become a national sales and distribution company within four years.

While Ford will cease making cars here in 2016, both Toyota and Holden will cease manufacturing by the end of the following year.

Speculation of Toyota’s Australian manufacturing pull-out intensified following Holden’s announcement in December, when it said its local manufacturing operations faced “unprecedented pressure” due to reduced economies of scale, due to the nation’s shrinking supplier base.

Further pressure was placed on Toyota Australia when union-led factory workers succeeded in achieving Federal Court action blocking it from seeking variations to the current workplace agreement.

This was despite efforts to increase the efficiency of the Altona plant – to the tune of $3800 per vehicle – becoming more crucial than ever following recommendations by the federal government-appointed Productivity Commission to axe all taxpayer assistance for the car industry by 2020.

Toyota Australia is now expected to drop its appeal against the court’s decision, which was due to be heard in May.

However, Toyota said today’s announcement “was not based on any single factor”.

“The market and economic factors contributing to the decision include the unfavourable Australian dollar that makes exports unviable, high costs of manufacturing and low economies of scale for our vehicle production and local supplier base,” said Toyota in a statement today.

“Together with one of the most open and fragmented automotive markets in the world and increased competitiveness due to current and future Free Trade Agreements, it is not viable to continue building cars in Australia.”

“This is devastating news for all of our employees who have dedicated their lives to the company during the past 50 years,” said Yasuda.

“While we have been undertaking the enormous task of transforming our business during the past two years, our people have joined us on the same journey, which makes it even more difficult to announce this decision

“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.

“Although the company has made profits in the past, our manufacturing operations have continued to be loss making despite our best efforts.

“Our focus will now be to work with our employees, suppliers, government and the unions as we transition to a national sales and distribution company. Support services will be available to our employees and we will do everything that we can to minimise the impact of this decision on our employees and suppliers.”

Toyota said it will import the Camry and Aurion beyond 2017, along with its existing range of imported models. It's anticipated the Camry and Aurion for Australia will be sourced from Thailand, where both cars (and the Camry Hybrid) are built and could be imported into Australia at a relatively low landed cost, thanks to the free trade agreement between the two countries. The company's Australian-delivered HiLux light commercial vehicle range is already sourced from Thailand.

Toyota also said the impact on the company's corporate divisions “will be studied over the coming months to determine what roles and functions will remain in the future”.

Ford has committed to local vehicle development and engineering beyond 2016 and Holden will continue to design vehicles in Australia.

However, the fate of Toyota Australia’s Notting Hill technical centre and Toyota Style Australia in Port Melbourne remain unknown, although Toyota Australia is likely to relocate its head office from Melbourne to Sydney, alongside its existing sales and marketing office. The company's name may change from Toyota Motor Corporation Australia to Toyota Motor Sales Australia - although the acronym for that title is already used by Toyota in the USA. 

“We will work with our key stakeholders to determine how to provide the best support to our employees, suppliers and local communities during the coming years,” said Yasuda.

“Not only do we need to ensure our local suppliers and employees can plan for their future, we also need to make sure that we continue to produce high quality vehicles and engines for our domestic and export customers.”

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