SABRA LANE, PRESENTER: The Federal Cabinet met in Adelaide today in a city that's trying to plan a future without a local car manufacturing industry.

The sector will shut down in two years.

But a property developer and a former Victorian Family First candidate believe they can succeed in car making where others have failed. They've set up a start-up company that they believe can be sustainable and successful.

But they need a hand-up first and they're hoping the Federal Government will change its rules on its automotive transformation scheme, as Alex Mann reports.

ASHLEY FENN, FOUNDER, ETHAN AUTOMOTIVE: These cars are fantastic. They're very exciting.

RACING COMMENTATOR (SBS TV): Away we go in Winton for the Australian Sports Racer Series. Motorcycle-powered...

ASHLEY FENN: Just to stand by them and listen to them: it's very exhilarating.

RACING COMMENTATOR (SBS TV): These things are fast. They're cool and they always produce really good motor racing.

ALEX MANN, REPORTER: When Ashley Fenn and Matt Newey decided to buy West Race Cars, they had a much bigger game plan that went far beyond the racetrack.

ASHLEY FENN: It's a good message. Our suppliers like to see us being involved. And I think it's a fantastic opportunity as well. These are great cars.

(To Matthew Newey) When's he get the new model?

MATTHEW NEWEY, CHIEF OPERATING OFFICER, ETHAN AUTOMOTIVE: In the next month or two.

ASHLEY FENN: Oh, that'll be good. Be a lot more competitive.

MATTHEW NEWEY: Absolutely.

ALEX MANN: Ashley Fenn has big ambitions. Buying this racing car company is the first step to manufacturing Australia's next family SUV. And the former Victorian Family First candidate reckons he can succeed where Toyota, Ford, Holden and Mitsubishi have all failed.

(To Ashley Fenn) Can you understand why there's a great deal of scepticism around your foray into this industry?

ASHLEY FENN: People say that, you know, you might be crazy. What we have found is that if we believe in something - and, you know, the numbers stack up and the business model works - there's no reason why it can't happen here in Australia.

ALEX MANN: Today the company's fast cars are heading to Queensland for another race. But for Ashley Fenn and his operating officer, Matt Newey, it's a different victory on their minds.

They want the Federal Government to allow them access to a special car industry transition fund to get their dream of making a family car off the ground.

ASHLEY FENN: I'm not talking about just ongoing pouring out money: we're just talking about initial alternatives to allow the employment to happen here in Australia, rather than all going overseas.

ALEX MANN: Today South Australia's flailing manufacturing industry is at the top of the political agenda.

TONY ABBOTT, PRIME MINISTER: An enormous amount of work has gone into today's announcement.

ALEX MANN: Over two days, funds have flowed for NBN jobs, diversification and huge defence projects.

TONY ABBOTT: A decision has been made that will secure this industry and our national security forever.

ALEX MANN: But those announcements didn't contain what Ethan Automotive and many car part suppliers were listening for.

Rebuilding the car industry is not on the Government's agenda.

ASHLEY FENN: I think if we can show the Government that there is an alternative to giving $600 million to these foreign-owned companies who are just going to leave, I think common sense will prevail.

ALEX MANN: More than a decade ago, the Automotive Transformation Scheme was set up to modernise the industry and support diversification.

Its aim was to support those businesses dependent on the car industry. Now Ashley Fenn wants the scheme changed so he can use those funds to set up his business.

ASHLEY FENN: We're not asking for the Government to turn their purses over to us. What we're asking the Government to do is invest into the manufacturing sector here: into the suppliers, into after-market, into start-ups.

KIM CARR, SENATOR, OPPOSITION INDUSTRY SPOKESMAN: There is enormous opportunity here to attract new investment into automotive skills, which are the foundations for so much of what occurs in manufacturing. I don't want to see that lost.

IAN MACFARLANE, INDUSTRY MINISTER: The industry, as I say, is not asking me to change the guidelines. They have been in place for a very long time. They're tried and proven. They provide very important support for the car industry at a very crucial time. And I don't intend to change the guidelines.

ALEX MANN: But Ashley Fenn and Matt Newey have a business model that they're convinced will give the Government pause for thought.

Matt Newey has worked for almost 20 years in the automotive industry in the US, the UK and Australia and he says their business can be sustainable with a low-volume production run and a modular chassis that would be used across three different models.

The first model off the plant would be a luxury SUV with a price tag of about $40,000.

MATTHEW NEWEY: The main advantage of doing things like that is the actual cost to establish the business. It's significantly less than trying to put in the infrastructure to support 150,000 units of the same vehicle.

DARRIN SPINKS, MD, PRECISION COMPONENTS: You know, if it comes about, then we'd like to think that we've positioned ourselves to take advantage of that and, further, get some benefit out of our skills and equipment.

This cell is a little bit different...

ALEX MANN: But with an end in sight for the auto industry, time is running out for Precision Components.

DARRIN SPINKS: We've got a lot of work to do. We've got two years before our main customer, you know, does leave. And we've got two years to fill that gap.

ALEX MANN: Darren Spinks accesses funding under the Federal Government's Automotive Transformation Scheme. But that funding will end in 2017, when the last local car maker goes. He sees the new car idea from Ethan Automotive as a way of saving his business.

DARRIN SPINKS: I mean, obviously we would like to see the ATS scheme be broadened to allow automotive companies such as our own to continue to receive ATS for manufacturing in general, because that's the skills and capabilities that we have. And we believe there's a future for the right company.

ALEX MANN: Opposition Industry spokesman Kim Carr says the Labor Party will take a broadened scheme to the next election, but won't be doing it for Ethan Automotive.

KIM CARR: I'd like to see their claims tested. Just because someone makes an assertion doesn't make it an accurate claim to actually activity. I would be very concerned that just because someone says they're going to do something does not mean that you pay them money.

ALEX MANN: The Government has bigger doubts.

IAN MACFARLANE: The biggest car makers in the world have found it too difficult to make cars in Australia. GM and Toyota have both made the decision to pull out: Ford as well, which is a very, very significant manufacturer globally; have said the numbers just don't add up making cars in Australia.

ALEX MANN (to Matthew Newey): Do you believe it will work?

MATTHEW NEWEY: I believe it will work. I wouldn't have joined the company in the first instance if I didn't believe that a) we've got a great opportunity here to do something different and b) that we can make it successful.

SABRA LANE: Alex Mann reporting.