A $100-million fund for manufacturers to diversify and expand their businesses as automotive producers leave Australia will be part of tomorrow's federal budget.

Industry Minister Arthur Sinodinos said the cash would build on previous funds for businesses to diversify and would target businesses wanting to produce high-value products as the car manufacturing sector winds down.

He said a lot of the cash would go to businesses in Victoria and South Australia.

Holden will cease production on October 20 in South Australia, while Ford closed its Australian factories after more than 90 years of production last year.

But South Australia's Manufacturing and Automotive Transformation Minister, Kyam Maher, has described the funding as "a dud".

He said there were few details about which states would get funding and how much.

"We are now less than six months from the closure of Holden and this is a relatively small amount," Mr Maher said.

"The Federal Government has made savings [and] has ripped $800 million out of the Automotive Transformation Scheme and we have been calling for three years for that full amount to help with the effects of the closure of Holden."

The former Abbott government announced a policy shift in 2015 and then prime minister Tony Abbott said the scheme would be "winding down as the car industry shrinks".

Mr Maher said there was $785 million left in the Automotive Transformation Scheme.

"So the amount that has been announced [today] is a dud deal for South Australia. It's a dud deal for South Australian auto-workers and quite frankly is too little, too late."

Mr Sinodinos defended the unspent funding in the Automotive Transformation Scheme.

"That's available for production, so if we continue producing domestically or for export until 2020 that money will be there," he said.

'Aussies are rev heads' and businesses can tap into that

As part of the funding, Mr Sinodinos said $47.5 million would be for an advanced manufacturing growth fund, about $24 million would be for advanced research projects to help companies develop new products, $10 million would go to innovation labs in Victoria and South Australia, and $5 million would go towards maintaining engineering expertise by investing in student research.

"It's likely a lot of it will still find its way to places which have specialised in the past in the auto sector, but which are now seeking to diversify and do new things. But some of it will also make sure our components supplies can be part of global supply chains," Mr Sinodinos said.

"Australia has got a great future in advanced manufacturing, including in the auto sector.

"I opened the Auto Aftermarket Expo in Melbourne a few weeks ago and Australians are rev heads.

"We love our cars and we love looking after our cars and there is a lot we can do in the future to build on the expertise we have got here."

Nick Xenophon Team leader Nick Xenophon said the announcement, which he has been fighting for, was a huge win for South Australia.

Senator Xenophon said the fund was the result of lengthy negotiations to secure money for businesses currently reliant on Holden.

"This is unambiguously good news for South Australia," he said.

"Finally we're seeing some funds released that will allow small and medium-businesses in the automotive sector to be able to transition once Holden closes in October.

"It will mean these businesses are able to turbo-charge diversification plans."