Belgian entrepreneur Guido Dumarey's bid to keep Holden's production lines running beyond 2017 has failed, with both parties today conceding to the "insurmountable" challenges of the proposal.
GM International, which manages the Australian operations, and Dumarey's Punch Group issued a joint statement late today saying the rescue bid would not go ahead due to the "insurmountable" challenges with keeping the supply lines alive.
The news comes on the same day as Holden announced it would switch off Cruze production in October - the same time as Ford plans to end more than 50 years of Falcon production - with the loss of 400 jobs.
The statement reads:
General Motors and Punch Corporation have undertaken and completed a detailed global evaluation of a proposal from Punch Corporation to continue manufacturing vehicles at Holden’s Elizabeth plant in South Australia.
Both parties concluded that a viable business model was not possible for this case. Therefore the proposal will not be taken forward.
GM and Punch have communicated on this decision.
As discussions have been governed by a Non-Disclosure Agreement, neither party involved is able to discuss details of the proposal, nor the assessment.
The challenges to domestic automotive manufacturing in Australia - lack of scale, high production costs, supply base contraction and increasing market fragmentation - persist and cannot be overcome for this business case.
In particular, the wind down of the supply base following the manufacturing exit of the three existing car makers, and the critical production mass they represent, is insurmountable.
GM thanks Punch Corporation for their proposal. GM will continue to consider Punch Corporation, along with other interested parties, to participate in the sale process of the Elizabeth plant and assets after GM ceases local manufacturing.
Punch Corporation will continue to pursue other business opportunities in the Australian automotive sector.
Industry Minister Christopher Pyne said he was "surprised and disappointed" by the decision.
"It [the decison to exit talks] does not match the statements both Punch and GMH have made to me," he said.
"At the end of the day it is a decision for the two parties involved.
"The Government offered every support to Punch in every matter that they raised with us," he said.
"We will continue to offer help to Punch in pursing other opportunities in the automotive sector should they choose to do so."