Toyota Motor Corp (7203.T) said on Monday it would stop making cars and engines in Australia by the end of 2017, marking 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 is a setback 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.
"This is obviously devastating news for everyone involved with Toyota. It's devastating for me and for the government," Abbott said in Canberra.
Union leaders were more vocal in their criticism of the government's handling of the auto industry's woes.
"The loss of the automotive manufacturing industry in Australia will have far reaching consequences around the country and throughout the economy," said Australia Council of Trade Unions (ACTU) Secretary David Oliver.
"They've (the government) done absolutely nothing to keep Toyota in this country," he added, warning that A$21 billion ($18.80 billion) would be wiped from the economy and that some regions would go into recession.
The ACTU groups the main Australian trade unions under an umbrella group.
BLOW TO MANUFACTURING
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.
While Australians bought a record 1.14 vehicles last year, according to the Australian Federal Chamber of Automotive Industries, the proportion made domestically was a record low at barely 10 percent. Toyota was the top-selling brand, holding nearly one-fifth of the market.
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.