Manufacturing in Australia is a deteriorating industry, which has seen more than 125,000 jobs dry up since the global financial crisis (Biddle 2013). With declining demand for Australian-made vehicles (Biddle 2013) and a rapidly changing global economy, car manufacturers have made the decision to cease vehicle production in Australia. With an entire industry disappearing, a large percentage of skilled workers will be left unemployed, leading to increased unemployment and a loss of skills that will no longer be needed in Australia. This decision could have drastic effects on the economy, as its knock-on effects will impact other industries, which rely heavily on automobile manufacturing. The state of the manufacturing sector in Australia can be analyzed using international trade theory to better determine the factors influencing this change. Product life cycle theory is a process in which a product is developed in one country, and over time, neighboring countries began to develop similar products. and seek to import (Hill 2013). While this is not an accurate way to account for the decline in demand for Australian-made vehicles, the process can be observed in the automotive industry. As countries with different factor endowments have started manufacturing cars, they are able to produce vehicles more efficiently domestically and then import the final product into Australia, putting pressure on the market interior. With the increased supply and availability of imported cars, Australia's demand has caused its vehicles to drop significantly. This decline is illustrated by the change in the best-selling cars in Australia. In 2002, the three best-selling vehicles were produced in Australia, where so far only the Holden Commodore makes the list (Biddle 2013)... middle of paper ......r major car manufacturers in Australia The cessation of production is the consequence of a change in the economic structure in Australia, which sees the disappearance of an entire manufacturing industry. Although this is an unfortunate outcome, the role of these companies is to remain competitive and generate profits. Despite government support and constant restructuring, major manufacturers were unable to shift consumer demand, leaving factories inefficient. Without positive future prospects and negative forecasts, businesses would not be able to remain in Australia without operating at a loss (Economist 2014). The chain of events that led to the demise of the Australian automobile industry was a strong exchange rate, constant tariff reductions and high labor costs which significantly affected the future prospects of vehicle manufacturing in Australia..