TREASURER Joe Hockey has declared the future of car manufacturing in Australia lies in the hands of the car industry.
But some of his Liberal-National coalition colleagues say a taxpayer lifeline will be thrown to Holden to prevent it from closing, after 65 years of car making in Australia.
Holden itself says local manufacturing cannot compete globally without public assistance of around $1 for every $3 invested by the company.
Media reports suggest the board of Holden's American owner General Motors has already decided to pull out of Australia from 2016, but won't announce the decision until early 2014.
"They are going. They will not want to put more money in after the current model run winds up in 2016," a senior industry representative told the Wall Street Journal.
Holden's future dominated question time in federal parliament on Monday, where Mr Hockey was asked by Labor to guarantee the company's future.
"The future of the car industry is in the hands of the car industry," Mr Hockey said.
The previous Labor government had let Mitsubishi close its operations in 2008 and Ford would follow in 2016, Mr Hockey said.
Mr Hockey said the best thing Labor could do for the car industry was repeal the carbon tax.
Holden estimates the carbon tax adds $45 per locally-made vehicle but says the cost is absorbed by the company.
Industry Minister Ian Macfarlane has been in talks with car makers in recent weeks and initiated a Productivity Commission inquiry into the industry, which will hand down an interim report on December 20.
Mr Macfarlane told parliament on Monday the government was "not working on the pretext that Holden is leaving the country", but was coming up with a solution.
"We have a purposeful, methodical, measured approach to assessing the future of the car industry in Australia," he said.
South Australian Liberal leader Steven Marshall, who is aiming to unseat the state Labor government at the March 15 state election, said the coalition would not let the industry die.
"I'm quite convinced if there is a deal to be done, the coalition will do that deal," Mr Marshall said.
SA Premier Jay Weatherill will meet Prime Minister Tony Abbott on Thursday to discuss the car industry's future and the federal government's election pledge to withdraw $500 million from assistance.
"The future of Holdens (sic) is in the hands of the prime minister," Mr Weatherill said.
Mr Abbott said last week the government would not provide a "blank cheque" to Holden and the company owed its workforce, suppliers and the public an explanation about its future.
Holden boss Mike Devereux is due to front a Productivity Commission inquiry hearing in Melbourne on Tuesday.
Holden's submission to the inquiry said it had generated $32.7 billion in economic activity in Australia from 2001 to 2012 during which time it received $1.4 billion in federal government assistance.
"Without public assistance, Holden's local manufacturing cannot compete globally," the submission said.
It said assistance needed to be "set at appropriate levels and be ongoing".
Holden said it built cars Australians wanted to buy and did so cost-effectively, but Australia lacked a "clear, long term national policy".
The company said Australia faced an "economic shock and significant unemployment" if car making ended.
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