Car sector reviewed as future 'uncertain'

A new government inquiry has triggered speculation about the car industry's future in Australia. Source: AAP

LABOR and industry have sounded a warning over the future of car-making in Australia, as the government launched an inquiry into ways to boost jobs and exports.

The coalition, which promised ahead of the September election to review auto industry assistance, has asked the Productivity Commission to initially report on the issue by December 20, with a final report due by the end of March.

The inquiry will look at Australia's attractiveness for investment, how other countries assist their car industries, consumer preferences, workplace arrangements and innovation.

It will examine ways to support the industry, including re-targeting the current Automotive Transformation Scheme and reducing taxes and red tape.

Treasurer Joe Hockey says he has a responsibility to spend taxpayers' money wisely.

"We are not running down the street chasing an individual car maker with a blank cheque made out by the Australian taxpayer. It's got to be a partnership," Mr Hockey said.

"We don't want to see any job losses ... but also we want to ensure that Australian taxpayers are not being held to ransom by any company."

Industry Minister Ian Macfarlane will talk with Toyota executives in Japan this week, having already spoken with Holden boss Mike Devereux.

Opposition industry spokesman Senator Kim Carr said manufacturers needed action, not more inquiries.

"This is a government that is now playing chicken with the automotive companies," Senator Carr told AAP.

"They are using this report as a ruse to get them past the South Australian election (on March 15, 2014)."

Senator Carr has been told the board of General Motors, Holden's American owner, had met three weeks ago to discuss the future of Australian operations.

"The mood is bleak," he said.

The former industry minister said Australia lagged well behind other car-making countries in terms of public investment in the industry.

On a per capita basis over a year, Australia spent $17 compared with $90 in Germany and $264 in the United States.

A spokesman for Holden told AAP the company would make a submission to the inquiry, but he would not speculate beyond the current generation of products, which are due to be replaced in 2016/17.

"We are continuing to talk to the government, but we are not going to speculate on deadlines," the spokesman said.

In a leaked email from Mr Devereux to some Holden dealers, the company chief said he would lead the talks with the government before taking up a new senior role with GM in China at the end of the year.

"As you well know, the future of the manufacturing industry is uncertain," Mr Devereux wrote.

He said he would contribute in his new role to the future success of Holden by "influencing the future product portfolio for the Australian market".

South Australian Premier Jay Weatherill said this week the federal government should not delay a decision on a further "co-investment package" for Holden, which employs 1700 people at its Elizabeth plant and another 300 at the engine making plant at Port Melbourne.

Ford signalled this year it would close its Victorian car-making facilities by October 2016.

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