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Chevrolet brand to take exit route in Europe

Seoul/Sydney: General Motors Co may consider shipping more South Korean-made cars to Australia as part of a global restructuring that will see its Chevrolet brand in Europe dropped and production in Australia potentially scrapped.

GM has decided to pull out of making cars in Australia as early as 2016. One option that would be looked at was to supply Australia using factories in South Korea affected by GM’s announcement on Thursday that it will drop the Chevrolet brand in Europe by the end of 2015.

GM Korea shipped 187,000 Chevy cars to Europe last year but the brand has failed to gain significant share in the market.

“GM Korea could consider exporting Korean-made cars such as the Cruze compact to Australia if it were to shut down a plant there,” a source said. GM Korea has not started discussions on the plan yet.

GM Korea said in a statement that: “The phase-out of Chevrolet in Western and Eastern Europe will increase focus on driving profitability, managing costs and maximising sales opportunities in Korea.”

GM Korea last year exported about 30,000 vehicles including Barina/Aveo subcompact and Captiva sport utility vehicles to Australia, where they are sold under the Holden badge. Such a move might face a backlash in Australia, where there are widespread concerns that any exit by GM Holden will be followed by Toyota Motor Co, causing a collapse of the entire domestic industry.

“When Holden pulls out of this country, it will be a domino effect,” said opposition Senator John Madigan, whose state of Victoria is the one of the major centres for Australia’s auto industry.

“Already car component manufacturers have lost critical mass with the decision of Ford to pull out of Australia. If another one pulls out, that’s the end, then we’re going to be hearing about Toyota — there are going to be tens of thousands of jobs lost.”

A spokeswoman for Toyota Australia, which has previously said it expects to make to a decision on its manufacturing future in the country in 2014, declined to comment.

Holden, which traces its roots in Australia to a saddle maker in 1856, makes vehicles at its Elizabeth plant in South Australia and engines in Port Melbourne, Victoria, employing almost 4,000 people and producing around 95,000 vehicles a year.

Australia’s auto industry has been under pressure for years as high costs, a strong local dollar, weak exports and tough international competition take a toll.

In May, Ford Motor Co announced it would shut its two Australian auto plants in October 2016, following the exit of Mitsubishi Motors in 2008.