When will Holden woes end? | comment

Holden can't survive on domestic car sales alone.

Well, that didn't take long, even in political terms. After just three weeks as the Abbott Government's Federal Industry Minister, Ian Macfarlane has made a rapid retreat from several of his key demands of Holden in his early days in office.

After initially claiming any future deal would be: "'The End', in capital letters, in black, six feet high, 'This is all we're ever going to give you'," Mr Macfarlane revealed he was trying to come up with a "blood transfusion" to keep Holden going until June 30. Money that Holden hasn't asked for -- and doesn't need. Holden -- and the rest of the car industry for that matter -- is after continued support beyond 2016.

Then after a tour of the Toyota's factory in Altona in the middle of this week Mr Macfarlane backed away from his export demands of Holden, admitting "I don't know what's unrealistic and what's not", when asked if he had set the bar too high (he had, by asking Holden to almost double exports to 30 per cent of local production).

We now know, thanks to a leak from senior government sources, that Mr Macfarlane's export demand was one of the first issues Holden hit on the head during his two-hour closed-door meeting with the car maker last week.

For background, exports aren't viable because (a) our dollar and our labour costs are too high, and (b) even if our dollar weakens, the "global" cars that Holden will build in Australia from 2016 onwards can be built elsewhere far more cheaply, thereby eliminating export destinations.

You can now start to see why Holden and the Federal Government are backed into a corner. Holden can't survive on domestic car sales alone because decades of tariff reductions and Free Trade Agreements have opened the door to a flood of cheap imports.

The top-selling car, the Mazda3, has led the market for the past two years on about 44,000 sales -- less than half what the Holden Commodore sold at its peak.

So, the burning questions remain: does Australia want to keep building cars -- and keep 40,000 jobs for manufacturing workers, many of whom would likely end up on unemployment benefits, based on previous industry shutdowns? Can Australia afford to keep the car industry? Can Australia afford to lose it?

SA Premier Jay Weatherill believes the Productivity Commission will recommend taxpayer dollars be spent elsewhere.

Despite Mr Macfarlane's passion for the industry (he brought a cap signed by the late racing legend Peter Brock to the Holden factory tour) and vocal support for the workers (he says he still knows how to weld, from his time as a farmer), there was one more clue this week that Holden's drama is far from over.

He said the government will "assess through the Productivity Commission whether or not we can make the industry viable. I will do everything I can … but in the end it's a decision of the Government," Mr Macfarlane said in the media scrum after his Toyota visit. Translated, that means the real decision-makers on Holden will be Prime Minister Tony Abbott and Treasurer Joe Hockey.

Mr Hockey's views on wanting the industry to stand on its own are widely known. Despite the rhetoric from Prime Minister Abbott, the industry believes he could be swayed either way. Predicting the outcome of this decision is like picking the winner of the Melbourne Cup a year out.

What will likely weigh most on Mr Abbott's mind, however, is not whether the industry is viable, or if he wants to save 40,000 jobs, but if he wants the death of Holden on his watch.

If the Holden factory closes, by genuine coincidence of vehicle production cycles, it will shut about the same time as Mr Abbott will head to the polls for re-election for the first time.

This reporter is on Twitter: @JoshuaDowling