In a statement issued late on Friday, Holden’s parent company General Motors said it 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,” said the statement by GM International spokesman George Svigos.

“Therefore the proposal will not be taken forward.”

While the State Government had been cautious about the prospects of success, today’s confirmation is nonetheless a blow, with InDaily this week revealing plans by Jay Weatherill to seek assurances over the proposal when he meets GM executives in Detroit next month.

Weatherill said in a statement today the announcement was “further disappointing news for Holden workers and our northern suburbs”.

“I will be visiting Detroit in coming weeks to discuss with GM their plans to support these workers and to put to them proposals about the future use of the plant at Elizabeth,” he said.

“The State Government will continue to stand by the workers in the car industry.”

Svigos said both GM and Punch had “communicated” about the decision, but that “as discussions have been governed by a Non-Disclosure Agreement, neither party involved is able to discuss details”.

“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,” Svigos said.

“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.”

The statement said GM would “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”, while Punch would continue to “pursue other business opportunities in the Australian automotive sector”.

It was a blow upon a bruise, after Holden earlier told workers it would wind up Cruze production in October, with up to 400 jobs to go.

It said it would continue to build the Commodore and remained committed to maintaining production at the Elizabeth facility until the end of 2017.

The carmaker said the latest decision came as no surprise to its workforce and has been discussed in weekly staff meetings and forums.

“Holden is giving our employees and suppliers as much advance notice as possible,” human resources director Ashley Winnett said on Friday.

“We have openly been discussing this move with our people since 2014.”

The October job cuts will reduce Holden’s workforce at Elizabeth to about 800 as the Cruze is replaced in the Australian car market by the imported Astra model.

Holden managing director and chairman Mark Bernhard said the end of Cruze production would be a difficult time for employees but was always part of the company’s gradual scaling down of production in Australia.

“October will bring to an end five-and-a-half years of Cruze production that saw nearly 125,000 built and sold in Australia,” Bernhard said.

“I want to thank our people for the part they have played in Holden’s history.”

Bernhard said those people remained the company’s priority and reaffirmed its commitment to help them find new work.

“Our focus is to manage the gradual wind-down of manufacturing between now and the end of 2017 in a way that treats out employees with respect and dignity as they leave the company and gives them the best chance at gaining future employment,” he said.

GMH’s Elizabeth factory is scheduled for closure in 2017, resulting in the total loss of some 1700 jobs.

Holden workers were made aware of the Elizabeth plant’s closure in 2012, when shifts were merged and about 100 casual positions were cut.

About 400 workers were retrenched in 2013 and a further 270 jobs were cut in April last year.

Automotive Transformation Minister Kyam Maher said while a gradual wind-down of operations was expected, “putting a date on it will still come as a shock to many workers so our thoughts are with the workers at this difficult time”.

He reiterated calls for the Federal Government to ramp up its investment in automotive transformation.

“We’ve recognized that as circumstances change, we need to change what we do,” he said, arguing that the state had increased eligibility for support services and outlined its Northern Economic Plan.

“We’ll work with Holden over the next nine months to understand which supply companies will be affected, and work with those companies to see if we can help them diversify into other areas – and even more critically with the workers of those companies, to make sure they’re accessing State Government schemes to gain career advice and training,” he said.

-with AAP