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Toyota to cease manufacturing in 2017

Toyota to follow Holden and Ford and end its local production.

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Toyota today announced it will stop producing cars in Australia by the end of 2017, ending months of speculation about the brand’s loss-making local manufacturing operations.

Toyota Australia president and CEO Max Yasuda is currently addressing employees at the plant’s Altona production facilities, with the announcement being screened to employees around the country.

Toyota is expected to announce that it will cease manufacturing in Australia in 2017.

Toyota is expected to announce that it will cease manufacturing in Australia in 2017.

In a press release issued at 5.00pm Yasuda said it was no longer viable to produce 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,” Mr Yasuda said.

“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 has been under intense pressure to announce whether it would commit to manufacturing beyond 2017, something that relied on the support of its parent company. The company has committed to decision by the end of 2014 but it was not expected to announce its departure this soon. 

It had been working with suppliers and employees in an effort to cut $3800 from the cost of manufacturing each car in an effort to make the Victorian engine and assembly lines profitable. 

The recent release of the Productivity Commission's preliminary report into the struggling Australian car industry no doubt didn't help. The Commission recommended the phasing out of most government assistance and suggested car making in Australia wasn't viable due to the lower production volumes.

While Toyota didn't blame its decision on "any one factor" as with Holden and Ford it's likely the reduction in government assistance, the fragmentation of the local car market and the increase in the Australian dollar conspired against the brand and made it impossible to create a viable business case.

Toyota has also hinted more jobs than the 2500 manufacturing ones will go. 

"There will also be an impact on the company’s corporate divisions, which will be studied over the coming months to determine what roles and functions will remain in the future," the media release said.