TOYOTA warns its future in Victoria is under "unprecedented pressure" after Holden said it would cease making cars in Australia, throwing 2900 people out of work.

In what could be the death knell for the entire Australian car industry, Holden said "a perfect storm of negative influences" was to blame for a decision that will send shock waves through the state.

Jobs and lives on scrap heap

Almost 65 years to the day since prime minister Ben Chifley launched the first FX Holden at Fishermans Bend, Holden said remaining in Australia simply wasn't viable.

"As painful as it is to say, building cars in this country is just not sustainable," said GM Holden boss Mike Devereux.

Ford announced earlier this year it would cease making cars in Geelong and Broadmeadows in 2016.

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Holden had said 1300 jobs would go when it closes its Port Melbourne plant, which makes the V6 engine, at the end of 2016. Its engineering centre will close by 2017.

Holden's Adelaide factory will shut at the end of 2017, when the final Australian-made Holden rolls off the production line, costing 1600 jobs.

Holden said it would become "a national sales company" and global design studio. The sale and service of Holdens, warranty terms, and spare parts would be unaffected.

The announcement sparked uproar and a vicious blame game in federal Parliament. Opposition Leader Bill Shorten accused the Government of "sabotage" against Holden, sparking a further furore last night.

"I believe that Holden were pushed," Mr Shorten said.

"What we don't understand is when the Australian Government decides to sabotage its own industry."

News_Module: nndslider holden

Mr Shorten said Holden's closure and job losses for thousands of auto workers was not inevitable. He said Holden "has effectively been goaded to give up on this country" by government ministers.

Prime Minister Tony Abbott said Mr Shorten's comments were offensive.

Mr Abbott said Holden's closure was "a sad, bad day".

I told the truth, says Devereux

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"I don't want to pretend to the Parliament that this is anything other than a dark day for manufacturing in this country," he said.

Mr Abbott said it was not time to indulge in the blame game or to peddle false hope as he promised the Government would announce in coming days a strategic response about the future of manufacturing.

Holden gave four reasons for closing: the high dollar, high cost of production, small domestic market and the world's most competitive, fragmented car market.

Unions said it was "almost certain" Toyota would also go, and the loss of the three car makers would cost tens of thousands of manufacturing jobs, cause "social carnage", and punch a $21 billion hole in the economy.

News_Rich_Media: Holden Chairman and GM Mike Devereux continues official announcement that it will cease manufacturing in Australia after 65 years.

Workers told of their devastation as they left the Port Melbourne factory just hours after being told their jobs would be axed.

One worker could only say he was "absolutely gutted" as he walked to his car with his head down.

Another said the production team had been left "shattered".

Father-of-three Richard Brown fought to hold back tears as he reflected on his 17 years as a mechanic with the company.

He said the hardest part is the uncertainty of how he would provide for his family in the future.

"It's been an emotional day, but we expected it," the 43-year-old from Geelong said.

"I'm not too happy. But that's life."

Veteran worker, who wished only to be known by his first name Ron, was proud of the Holden product and accused the State and Federal governments of not doing enough to save it.

"It's an icon gone - car manufacturing in this country is gone," he said.

"The governments should've stepped in long ago. We produce a world-class car, we are all good workers. The governments don't care, they are playing a game with our lives."

News_Image_File: Shocked workers at Port Melbourne. Picture: Tim Carrafa

The announcement that Holden will cease manufacturing in Australia in 2017 was a shattering blow for Bruce Lethborg, president of the Holden Sporting Car Club of Victoria.

"I've been a Holden man all my life; my father was and now my son is too," he said.

"But he won't be able to pass that on to his son. What will he be, a Hyundai man or a Kia man, a Daewoo man?"

Premier Denis Napthine revealed Holden's news in state Parliament, saying it was a "very, very sad day" for the state.

Dr Napthine vowed to stand "shoulder to shoulder" with workers to support them and their families.

"We will do everything we can as a Government to support the workers and their families through this very difficult time, as we have done with Ford workers in Geelong and Broadmeadows," Dr Napthine said.

"I can assure those workers we will stand shoulder to shoulder with them," he said

"We will ensure General Motors looks after their welfare during the period of transition."

Dr Napthine said he was also seeking urgent discussions with Toyota, which employs 4200 people, including 2500 making cars in Altona.

Toyota said in a statement: "This will place unprecedented pressure on the local supplier network and our ability to build cars in Australia."

"We will now work with our suppliers, key stakeholders and the government to determine our next steps and whether we can continue operating as the sole vehicle manufacturer in Australia."

News_Image_File: Holden boss Mike Devereux announces the decison the car maker will cease production in Australia. Picture: Calum Robertson

Mr Hockey issued a warning to Toyota workers to "vote for your job" by accepting company requests to change work practices that are opposed by unions.

He said conditions that gave workers 21 days off over Christmas - instead of 10 days - put at risk exports to their main market in the Middle East.

He said it was not helping Toyota's future when it cost $3800 more to make each car in Australia than in other countries such as Thailand.

Acting Labor leader Tanya Plibersek accused the Coalition of driving the car industry out of Australia by cutting $500 million from funding.

Acting Prime Minister Warren Truss said Mr Deveraux told him around 1.50pm the decision had been "made in Detroit" that the company would be "closing a significant part of their operation" in Australia and New Zealand by the end of 2017.

"We regret the fact that GM is to phase down its operations in this country," Mr Truss told Parliament.

News_Image_File: Bruce Lethborg, Holden Sporting Car Club president, has been driving Holdens for more than 40 years. Picture: David Caird

"Holden has been an iconic national brand for Australians, a part of our heritage. It has meant a great deal to Australians over several generations. Many of us have had the pleasure of travelling and owning Australian-built Holdens and it is a pity that will not continue into the future."

Amid uproar in Parliament from Labor MPs, Mr Truss said the Government "wanted Holden to remain manufacturing cars in Australia".

Mr Truss said the government stood ready to assist sacked workers and to support dealers and employees.

Labor frontbencher Tony Burke said the Government had "dared the company to leave".

Federal Industry Minister Ian Macfarlane blamed Labor for Holden closing, saying they created the problem over the past six years.

"They are the ones who laid the foundation for this closure," he said.

Mr Macfarlane said six years ago there were 335,000 cars being made in Australia but after Labor's time in power it had fallen to 221,000. He blamed Labor's poor policy.

Mr Macfarlane said it was "an extraordinary traumatic time" for Holden workers.

News_Image_File: Holdens roll off the assembly line in 1950.

Opposition Leader Daniel Andrews accused the Napthine government of not doing enough to save the state's manufacturing sector.

Speaking at the front of Holden's Port Melbourne factory, he called Dr Napthine "lazy, inept and out of touch", pointing out that both Ford and Holden had gone under his watch.

"He ought to be ashamed," he said. "He should've been on the phone to Tony Abbott, saying 'these jobs are worth fighting for'," he said.

With Ford and Holden now pulling out of manufacturing cars in the country, he said it would put added pressure on Toyota.