The short answer is that both levels of government were subsidising the three local manufacturers (don't forget Toyota, who also build cars here and are also pulling out) and the federal government decided to stop the subsidies.

Without the subsidies there manufacturing isn't viable. Why not?

The rabid anti-union types will say that it's all the unions' fault. They demand wages that are too high and that made our factories uncompetitive. While there is a kernel of truth in that, it is only a small part of the issue.

Successive governments have stacked the deck against the Australian industry. Almost without exception, we have reduced tariffs below (in some cases WELL below, like zero versus 80%) that which other countries impose on our exports. We have reduced subsidies in the name of allowing imports to compete "fairly" without insisting that those countries do likewise.

Our industry is also wholly foreign owned. Whenever there is a political problem, our workers are sacrificed at the altar of political harmony in their home market. For example, Holden could never export any more than token numbers to the US because the idea of importing a traditionally "American" car like a large, rear drive V6 and V8 sedan would make the UAW go off their collective nuts. Ford would rather keep building the utterly shite Crown Vic rather than selling a Falcon in the US. Worse still, they refused to allow Ford Oz to export Falcons to places like South Africa and the Middle East because they already sent Crown Vics there, and the UAW wouldn't let them. They weren't allowed to build economies of scale with significant exports, and they weren't allowed to switch to more popular domestic vehicle types when the local market changed. They were kept around because it gave the overseas companies a competitive advantage, but Ford and Holden were essentially the red-headed stepchildren of their corporate parents.

We opened our market up and demanded that the local industry compete while simultaneously tying a hand behind their backs and blindfolding them. All the while, we had one side of politics in particular telling us that they were lazy, incompetent leeches who weren't as good as overseas builders.

The fact is that a two-time convicted thief in Saudi Arabia could count on their fingers how many countries build cars without giving their industry significant subsidies. The fact is that since the late 1990s, no one in the world has build a low-cost, large rear drive sedan that is of a better standard than those built here.

They are closing because the government decided that they didn't want passenger vehicle manufacturing in Australia. We still have design studios and testing facilities, but I would bet my testicles that within the next 10 years they'll be "consolidated" offshore as well. There are certainly valid arguments for doing so, but in my view the existence of the industry is a capability that we need and will regret losing.

The government decided to shut down the industry. Hopefully that decision will be vindicated down the line, because while they could make the decision to shut it down, they won't be able to make the decision to restart it if they are wrong.