Mitsubishi's Australian assembly operations in Adelaide will close by the end of March, Australian Manufacturing Workers Union (AMWU) state secretary John Camillo says.
Mr Camillo said Mitsubishi Australia president Rob McEniry told workers at the Tonsley Park plant of the decision at a meeting on Tuesday.
About 1,000 workers will lose their jobs, with the company pledging to pay out all their redundancy and leave entitlements.
The workers have been told to take the rest of the week off on full pay and return to work again on Monday.
Mitsubishi has also pledged to provide counselling for workers.
"Rob McEniry spoke to the workers, it was very emotional," Mr Camillo said.
"He indicated that one hour ago Mitsubishi Motors Corporation in Japan made the announcement to close the Tonsley Park operation."
The Japanese car maker's decision ends the decade-long saga over Mitsubishi's manufacturing future in Australia and comes after the closure of the company's engine plant in Adelaide in 2005.
It also follows a series of assistance packages offered by successive state and federal governments to maintain the car maker's local operations.
Mr Camillo said a meeting of shop stewards would be held at the plant on Monday to clarify any outstanding issues over redundancy provisions.
He said one matter of concern was the urgency in closing the plant.
"Why does it need to close so quickly, March 31st?"
"They want to get out of there as quickly as they can and that concerns me greatly."
Mr Camillo said the decision to close the plant was a major blow to both the car industry and manufacturing in South Australia.
"It's not just a sad day for Mitsubishi workers and their families, it's a very sad day for manufacturing industry in the south of Adelaide," he said.
Mr Camillo said unions were also concerned about the knock-on effect of Tuesday's decision, with every job at Mitsubishi supporting an estimated seven jobs in the component and services sectors.
The company scheduled a media conference in Adelaide for later on Tuesday.
Prime Minister Kevin Rudd has called for Japanese automotive giant Mitsubishi to act responsibly as it closes its Adelaide plant.
"Mitsubishi has a responsibility to act appropriately," Mr Rudd told reporters in Canberra.
Federal Industry Minister Kim Carr has been speaking with Mitsubishi management in both Tokyo and Adelaide over the last 24 hours.
"I think we need to wait for what Mitsubishi itself formally determines," Mr Rudd said.
Federal and state taxpayer support for the company has run into the hundreds of millions of dollars and Mr Rudd said that funding should weigh heavily on Mitsubishi's thinking.
He said the government's discussions with Mitsubishi had been very focused.
"We were speaking quite specifically about Mitsubishi's current circumstances," Mr Rudd said.
Asked if a tariff freeze had been discussed, Mr Rudd did not directly answer the question.
"Both governments (are) being absolutely clear in their communications with the Mitsubishi board in Tokyo as to whether there is anything further from either government, state or national, that could be done that would be material to Mitsubishi's decision.
"It was very important for us to establish that and clarify that.
"We did that yesterday at the national level.
"The answer was, there was nothing."
Mr Rudd said the government had made the approach not because of Mitsubishi's financial position but because of the people who would lose their jobs as a result of the closure.
"Remember at this plant you've got nearly a thousand direct jobs at stake," he said.
"These are folk living in the suburbs of Adelaide, who have been as I understand it, on average working at this plant for 15 or 20 years.
"A lot of people spent their lives there.
"I think it's the responsibility of anyone trying to do the right thing just to check whether there's something that hasn't been done that could be done."
Premier Mike Rann was also expected to respond after indicating earlier he would ask for a $35 million loan made to the company in 2002 to be repaid if the company closed its assembly facility.
Workers outside the Mitsubishi plant told reporters the closure came as no surprise.
"We kind of expected it, but it's come sooner that what we thought," one worker said.
He said the workers' meeting with Mr McEniry was "pretty emotional".
"The boss (Mr McEniry) was pretty upset, it's not his fault, he's done his best."
Exhaust systems producer Tenneco says no jobs at its Adelaide operations will be affected by Mitsubishi's decision to close its local manufacturing facility.
Tenneco supplies the company with exhaust systems for the 380 model but said, because of the low numbers involved, the Mitsubishi decision would have minimal impact on employment levels at its O'Sullivan's Beach facility.
"The company is continuing to monitor the situation but anticipates that no full-time positions will be affected," Tenneco said in a statement.
