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Toyota Motor Corp.’s (TM - Analyst Report) Australian subsidiary – Toyota Motor Corporation Australia Ltd. (TMCA) – will be terminating vehicle and engine production in Australia by the end of 2017.

Toyota has been striving to attain operational efficiency in Australia over the past 50 years. However, the automaker faced headwinds like a highly competitive market, high cost of production and strong Australian dollar.

Moreover, Toyota is also planning to reduce the scale of operation at Toyota Technical Center Asia Pacific Australia Pty. Ltd. (TTCAP-AU) – the base where Toyota designs and evaluates vehicles manufactured in Australia.

TMCA employs around 3,900 workers and produces and sells Camry, Camry Hybrid and Aurion vehicles. Meanwhile, TTCAP-AU engages about 150 workers. Toyota plans to provide employment assistance to the employees who will be affected by this decision.

With this strategic decision, TMCA will be functioning as the sales and distribution center of the company in Australia. With this, Toyota will continue to sell vehicles and provide customer service in Australia.

Apart from Toyota, automakers like Ford Motor Co. (F - Analyst Report) and General Motors Co. (GM - Analyst Report) also plan to halt production in the country. General Motors recently announced its decision to discontinue production in its Holden plants in the South Australia and Victoria states of Australia by 2017. The move resulted from high production costs and strong currency. In May 2013, Ford announced that it intention to close two Australian auto plants in Oct 2016, due to the similar reasons.

Toyota also announced that it has decided to shut the vehicle assembly plant in Venezuela from Feb 13. The automaker’s decision was prompted by shortage of vehicle parts. The government's currency control measures are obstructing imports of essential products, thus hindering production.

Toyota plays a pivotal role in shaping the global automobile industry. Currently, Toyota carries a Zacks Rank #3 (Hold). Volkswagen AG (VLKAY) with a Zacks Rank #2 (Buy) is worth considering in the automobile sector.

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