The Federal Chamber of Automotive Industries says it thinks a report showing dire economic consequences if the car industry collapses in Australia will change many people's views.

The report was compiled for the chamber by the Allen Consulting Group and Monash University researchers.

It concluded the economy was $21.5 billion better off because of government subsidies to the car industry and nearly 40,000 jobs would be lost if car makers pulled out of Australia this decade.

Chamber chief executive Tony Weber said even it was surprised by the findings.

"When you compare the level of assistance provided by the Government, which is less than $500 million a year, the benefit for the economy is extremely large so this is very conservative modelling," he said.

The report said losing the automotive industry would hit the nation's GDP by $7.3 billion.

Mr Weber said Adelaide and Melbourne would be devastated by ensuing job losses.

"In Adelaide there'll be 6,600 less jobs and in Melbourne there'll be 33,000 less jobs," he said.

The Chamber said it would use the report as the basis of its submission to the Productivity Commission, which is reviewing the car manufacturing sector and due to hand down its report at the end of March.

Some key points in the modelling The modelling worked on a scenario where Australian automotive manufacturing ended over a two-year period from 2017 to 2018. Government assistance to automotive manufacturing equates to about $18 per person, deemed a very low figure by international standards. A $21.5 billion return equates to $934 per person in benefit. If Australia lost its automotive manufacturing: - GDP would be $7.3 billion smaller (in current dollars) by 2018. - Billions in foreign direct investment would cease, as head offices directed investment to other automotive manufacturing countries. - Employment losses in Melbourne would equate to some 33,000 jobs in 2018 and about 6,600 in Adelaide. These jobs would eventually return in both cities, but with lower real wages. The employment levels would not return until about 2027 for Melbourne and 2025 for Adelaide. - The economies of Adelaide and Melbourne would be heavily affected, with gross regional product (GRP) contracted by up to 1.4 per cent and it is likely GRP will be lower than preclosure levels until the end of 2031, while employment could fall by about 1.5 per cent. These impacts do not include the spill-over effects, including to advanced manufacturing and research and development. (Source: Federal Chamber of Automotive Industries report)

John Spoehr said a clever support package was essential

Industry analyst John Spoehr, of the Workplace Innovation and Social Research Centre at Adelaide University, said the modelling used for the report was conservative and the loss of jobs for a state such as South Australia was likely to be double that outlined in the Chamber's report.

He said there also were many components suppliers which would not survive any closure of Holden's manufacturing operation in northern Adelaide.

"There is no level playing field out there in the international auto industry, so it is a reality that if you're going to be a player in automotive manufacturing you have to supply support to it," he said.

"It is important that you forge a new deal if you like with manufacturers which offers a clever assistance package that works to transform the industry, diversify the industry and assure that it's here for the next 100 years."

South Australian Manufacturing Minister Tom Kenyon said the report made clear the Federal Government needed to take a decision about further backing for the car industry before the Productivity Commission review was completed next year.

"The Federal Government needs to step up, they need to stop being obsessed with the Productivity Commission report," he said.

"You don't need that report, you know that the economy will be in a hole to the tune of $21.5 billion because they weren't prepared to spend $500 million, it's ridiculous."

Victorian Opposition treasury spokesman Tim Pallas said the study made clear the value of taxpayer subsidies.

"The Napthine Government, the Abbott Government need to shed their ideology and recognise that vehicle manufacturing and the associated downstream industries of component supply are vital to Victoria and the nation's interest," he said.

"They need to get on with the work of speaking to the industry and making sure that they can preserve its future."

Independent Senator Nick Xenophon said losing the car industry would have a wide impact on Australian jobs and skills.

"While the closure of the car industry would have an impact of earthquake proportions in Adelaide and Melbourne, those tremors would be felt right across the country," he said.

Senator Xenophon said independent studies in SA had indicated more than 10,000 additional jobs would go as part of the wider impact in the state of losing its automotive industry.

"That's to say nothing of the high-tech skills and jobs that would be lost to the labour force without the training that the automotive industry provides," he said.

"These industries include engineering, robotics and design, which can be directly transferred those to other industries such as mining."

'Decisions in the right way at the right time'

Federal Finance Minister Mathias Cormann said the Government would not be making any rushed decisions about car industry support.

Sorry, this video has expired Graham Spurling ran Mitsubishi when it made cars in Australia and has thoughts on industry support

"In the lead-up to the last election we were very clear as to what our approach would be in relation to government support to the car industry," he said.

"We flagged that we would be conducting a Productivity Commission inquiry which is now underway, the terms of reference out there.

"We are going through a proper, orderly, methodical process. The Government will make decisions in the right way at the right time."

Opposition industry spokesman Kim Carr said the Government had a politically motivated timeline.

"Setting up the Productivity Commission report is to get them past the South Australian election, it's got nothing to do with the international investment decisions that are being made over the next little while," he said.

The SA election is on March 15 and Holden's future is sure to be a key issue, especially for the electorates of northern Adelaide where its manufacturing is based.