The chances of Toyota winning more support to stay in Australia appears slim after a Productivity Commission report warned the world was awash with cheap cars.
In a special report fast-tracked because of doubts over the future of Holden, which has since said it will stop building vehicles in Australia in 2017, the commission found high costs, the strong Australian dollar and a small domestic market were conspiring against the local car industry.
The focus is now on Toyota, which has warned that its future in Australia is at risk.
The commission will not deliver a report on possible government assistance to the industry until next month.
Yesterday's preliminary report suggests the commission, a strong opponent of industry handouts, believes even with taxpayers' cash there is little hope for mass car production in Australia.
It found there was fierce competition globally, especially in the small car sector.
In Australia, total production was well short of the 200,000 to 300,000 level that would be needed for car plants to be cost competitive.
And finding overseas markets was difficult, in part because of the strong Australian dollar.
"A major challenge for future automotive manufacturing in Australia is to increase the volume of local production but local sales growth is only part of the answer because the domestic market is small, fragmented and highly competitive," presiding commissioner Mike Woods said.
Production was shifting away from advanced, high-cost countries to nations with lower labour costs and growing demand, he said.
Australian car makers were competing against nations such as China, Thailand, Mexico and South Korea.
The report found Australian car buyers were benefiting from a global market where production was ahead of demand.
At least two component companies said the high dollar had driven down the price of competing imported products by up to 30 per cent.
Between 1998 and last year, the average cost of imported cars fell slightly, while locally produced cars increased in price 21 per cent.