Holden will cease operations in 2017

BREAKING NEWS: Holden confirms it will cease manufacturing cars in Australia in 2017 | What's really going on at Holden?

HOLDEN has confirmed it will cease manufacturing cars in Australia in 2017.

Victorian Premier Denis Napthine made the announcement in State Parliament this afternoon.

The announcement comes only one day after Holden chief executive Mike Devereux said that no final decision had been made about the company's future in Australia.

Dr Napthine said it was an irreversible decision made at GM Holden's US headquarters and he was only told this afternoon. He told Parliament it was a "sad day".

Acting Prime Minister Warren Truss said Holden boss Mike Deveraux told him around 1.50pm the decision had been "made in Detroit" that the company would be "closing a significant part of their operation" in Australia and New Zealand by the end of 2017.

"We regret the fact that GM is to phase down its operations in this country," Mr Truss told Parliament.

"Holden has been an iconic national brand for Australians, a part of our heritage. It has meant a great deal to Australians over several generations. Many of us have had the pleasure of travelling and owning Australian built Holdens and it is a pity that will not continue into the future."

Amid uproar in Parliament from Labor MPs, Mr Truss said the Government "wanted Holden to remain manufacturing cars in Australia".

Mr Truss said the government stood ready to assist sacked workers and to support dealers and employees.

GM released a statement this afternoon.

"We are completely dedicated to strengthening our global operations while meeting the needs of our customers," said GM Chairman and CEO Dan Akerson.

"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."

The statement outlined the expected job losses, with 2,900 Aussie jobs to go.

The closure will mean 1,600 jobs from the Elizabeth vehicle manufacturing plant and 1,300 from Holden's Victorian workforce.

"Holden will continue to have a significant presence in Australia beyond 2017, comprising a national sales company, a national parts distribution centre and a global design studio," the statement reads.

"This has been a difficult decision given Holden's long and proud history of building vehicles in Australia. We are dedicated to working with our teams, unions and the local communities, along with the federal and state governments, to support our people," Mr Devereux said.

The sale and service of Holden vehicles will be unaffected, the statement said, warranty terms and spare parts availability will remain unchanged.

Acting Labor leader Tanya Plibersek said the Federal Government had "got what it wanted" and workers "will pay the price".

Labor frontbencher Tony Burke said the Government had "dared the company to leave".

Federal Industry Minister Ian Macfarlane blamed Labor for Holden closing, saying they created the problem over the past six years.

"They are the ones who laid the foundation for this closure," he said.

Mr Macfarlane said six years ago there were 335,000 cars being made in Australia but after Labor's time in power it had fallen to 221,000. He blamed Labor's poor policy.

Mr Macfarlane said it was "an extraordinary traumatic time" for Holden workers.

Treasurer Joe Hockey, who yesterday called on Holden to "come clean" and say "either you're here or you're not", said the Abbott Government would work with the Victorian and South Australian governments and unions "to ensure this does not lead to a significant economic downturn".

"We will do everything we can to assist during this transition," Mr Hockey told Parliament.

"It is not a surprise this should have happened."

Earlier, Treasurer Joe Hockey told 3AW it was "wrong" to say Victoria faced a recession if Holden pulled out.

And the Treasurer predicted job losses were"greatly exaggerated".

Mr Hockey said only 2000 jobs were directly related to making cars - 1760 in South Australia and 200 in Melbourne.

The announcement will be made to the workforce later today.

Mr Devereux said emphatically yesterday that no decision had been made to close the company's assembly plants despite growing speculation production would stop as early as 2016.

But he also declined to outline any timetable for a decision and warned that ongoing government support was vital for the company to continue to invest in local production.

"We need a public/private partnership over the long term to be able to be relatively competitive," Mr Devereux told a Productivity Commission inquiry into the automotive industry.

The company agreed to a $275 million assistance package with the previous federal government in 2012 and was also promised more cash before the September election amid suggestions it needed as much as $500 million to commit to building two new model cars from 2016.

Following the election, the coalition reaffirmed its plans to cut $500 million from overall auto industry assistance and says no further cash is on the table for Holden.

Mr Devereux told the Productivity Commission the company was doing everything it could to cut the $3750 cost gap between building cars in Australia and building them in other countries.

"We do need to close the gap," he told the hearing.

"I don't suggest that we are asking to close that gap to zero."

He said the submission the company had made to the federal government clearly stated General Motors' threshold for doing business, but the details would remain confidential.

Holden said it generated $32.7 billion in economic activity in Australia from 2001 to 2012 and received $1.8 billion in assistance over the same period, a result it considered a good return on government investment.

More to come ...