Your call, politicians - industry minister Carr, a union official, Devereux and Australian prime minister Julia Gillard at the production launch of Holdens Series II [locally made] Cruze

Your call, politicians - industry minister Carr, a union official, Devereux and Australian prime minister Julia Gillard at the production launch of Holden's 'Series II' [locally made] Cruze

General Motors' Australian unit Holden will lose its Cruze small car programme unless the federal government pledges millions to secure the next generation model within a year, the company has said, according to local media reports.

Cancelling the Cruze, which was secured with A$149m from the Green Car Innovation Fund, would also jeopardise the company's Adelaide factory because demand for the Commodore large car was inadequate to keep it going, Holden said, according to The Australian newspaper.

Holden builds the Commodore for the domestic market and exports to New Zealand, the Middle East and South Africa. It is also shipping the Cruze to NZ.

In remarks other media suggested were timed to coincide with meetings of Australian federal industry minister Kim Carr with General Motors and Ford Motor Company executives in the US this week (he also announced plans to meet their regional management in China – and senior Toyota executives in Bangkok – later this year, according to GoAutoNews), Holden chairman and managing director Mike Devereux warned the decision to axe the Green Car Innovation Fund (GCIF) threatened the industry’s long-term viability.

Devereux is also the president of the local car industry’s key industry body, the Federal Chamber of Automotive Industries (FCAI).

In a statement ahead of his US visit, Carr emphasised the government’s commitment “to an economically sustainable automotive industry” in Australia.

Devereux said the green car scheme had worked perfectly and unless there was a replacement for it Australia would miss out on future investment. "We've just starting building Cruze here and over the next 12 months or so we'll have to make a decision on the next generation of that product," he said. "The business case would certainly not be as positive without any co-investment. Doing the investment in this country would have less positive financial outcomes than doing it in other low-cost places."

The Australian said Holden was understood to have only small profit margins on the car, which was previously imported from South Korea, but the Cruze, about to be launched as a hatchback as well as a sedan [with a wagon likely to follow], has been essential to keep its factory running as Commodore sales declined.

Ian Jones, the federal secretary of the Australian Manufacturing Workers Union's vehicle division, told the paper the industry had a right to complain after government changed its rules on support for the car industry.

"The government should not underestimate the signals, from that reversal of policy, sent to overseas investors," he said. "Car manufacturers invest billions and billions of dollars in this country on the understandings that were given to them around the Green Car Innovation Fund."

However, South Australian industry minister Tom Koutsantonis said the government had been justified in axing the scheme.

"I think the fund has run its course. I think we've benefited as much as we can out of that."

Regardless of that, he said, the Rann government would always support Holden, which employs 2,700 workers at the Elizabeth plant near Adelaide, in the state of South Australia.

Senior General Motors executives subsequently reaffirmed the automaker’s commitment to Holden’s manufacturing operations following their meeting with Carr in Washington.

GM’s vice-president for global public policy, Robert Ferguson, and vice-president of international government relations and public policy, Arturo Elias, met with the minister to discuss the company’s recent investments in Australia – aided by significant federal government funding – and “prospects for future growth, particularly with regard to exports”.

“Holden and our Australian facilities are vitally important to General Motors,” Ferguson told GoAuto News. “We are optimistic about the Australian marketplace and the products produced there.

“The research and engineering done in Australia is benefiting the company worldwide. Sales of the Camaro – developed in Australia – are robust.

“We’re also optimistic about the new police cruiser, the Caprice, which is being introduced to the police departments in America’s markets.”

Carr reportedly described the meeting with GM as “extremely positive”.

Other local industry pundits have suggested that, if GM was to close up manufacturing shop in Australia, Ford, whose Falcon and Territory manufacturing option is precarious after a plan for local Focus output went to Thailand instead, and Toyota, which builds Camrys for domestic, NZ and Middle East sales, could follow suit. Nissan closed its Down Under manufacturing plant in 1994 and Mitsubishi (nee Chrysler) pulled out several years ago.

Holden could revert to importing the Cruze from Korea (as it does with other models in its range) and replace the Commodore with a rebadged North American model like the Impala, the pundits suggested. Toyota has several other global Camry plants and Ford, like GM, could rebadge North American models like the Taurus and Explorer to replace the Falcon and its Territory SUV spin-off.

In the days of tariff protection, Australia was also home to large British Leyland and Volkswagen manufacturing operations, as well as its domestic 'Big Three' of Holden, Ford and Chrysler, while many other brands, including Mercedes, Renault and Peugeot, were assembled locally.