Toyota Motor Corp. announced that it will stop building cars in Australia in 2017, just a year after Ford Motor Co. and General Motors Co. said that they also plan to exit the local industry.
Toyota has been a car manufacturer in the region since 1963. The company explained its decision with high manufacturing costs, an elevated Australian dollar and low economies of scale. According to an e-mailed statement of Toyota, there are 2,500 manufacturing employees in Australia.
Max Yasuda, President of Toyota Australia, said in the statement, cited by Bloomberg: “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. Our manufacturing operations have continued to be loss making despite our best efforts.” On December the 12th, Mr. Yasuda made an e-mailed statement, saying that the planned closure of GMs Holden unit “will put our manufacturing operations and the local supplier network under unprecedented pressure”.
The departure of Toyota literally puts an end to the car industry situated in Australia, which dates back to 1901. In the last few years, customers became more oriented towards cheaper imported models. In May 2013, Ford officially said that it would stop output in October 2016. On the other hand, General Motors Holden unit announced its 2017 departure in December 2013.
Currently, Toyota Motor Corp. is reported to be the biggest automotive exporter in Australia. According to a November submission to a government inquiry on the future of the car industry, it sent about 73% of the 101,424 cars produced in 2012 overseas. Toyota Motor Corp. also made attempts to change the contract between the company and its plant workers as part of its plans to decrease the car production cost by nearly 3,800 Australian dollars (3,394 US dollars) a vehicle. On December 12th, the Federal Court in Australia came up with a decision blocking a vote among the companys workforce on the changes, which was appealed by the company.
The Australian unit of Toyota is located in Victoria where 12,600 jobs were cut in December 2013, the most of any Australian state according to the latest employment data released on January the 16th. More than 29,500 jobs in the manufacturing industry in Australia were cut from November 2012 to November 2013.
Paul Bastian, who is the National Secretary of the Australian Manufacturing Workers Union, made an e-mailed statement, saying that Toyotas decision is devastating “for thousands of Australian workers and the entire Australian manufacturing industry”.
Toyota Motor Corp.s shares rose by 1.59% in Tokyo to settle the session at 5 994 JPY, and its one-year return rate is +25.19%.
On the New York Stock Exchange, the company settled at $117.38 on Friday, up 1.22% on the day. According to CNN Money, the 20 analysts offering 12-month price forecasts for Toyota Motor Corp have a median target of $154.74, with a high estimate of $184.14 and a low estimate of $121.44. The median estimate represents a +31.83% increase from the last close.
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