UPDATE 1-GM says to end manufacturing in Australia by end-2017
SYDNEY, Dec 11 (Reuters) - General Motors Co said it would end vehicle and engine manufacturing in Australia by the end of 2017, dealing a severe blow to the country's auto sector.
The world's second-largest auto maker said it was closing its Holden plants in South Australia and Victoria states, affecting 2,900 jobs.
The decision comes after months of speculation and debate about GM's future in Australia and after the government on Tuesday demanded the company end the uncertainty about its future.
"The decision to end manufacturing in Australia reflects the perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world," GM Chairman and CEO Dan Akerson said in a statement.
The announcement came only one day after the head of GM's Holden unit said in Melbourne that the automaker had made no decision on whether to stop making cars in Australia after 2016 and would need more assistance from the Australian government to survive long term.
There have been widespread concerns that an exit by GM Holden would be followed by Toyota Motor Co, causing a collapse of the entire domestic industry, supporting more than 40,000 workers and 150 supplier companies.
In May, Ford Motor Co said it would shut its two Australian auto plants in October 2016, following the exit of Mitsubishi Motors in 2008.
Australia has annual sales of around 1.1 million new vehicles, but sales of locally manufactured vehicles have fallen to less than a quarter of that, from almost 389,000 in 2005.
GM said it expects to record pre-tax charges of $400 million to $600 million in the fourth quarter of 2013.