The automotive industry changes constantly. In Australia, the cost of raw materials and fuel is volatile, regulations are tighter and competition is greater. As a result, innovation is encouraged.

Environmental concerns must increasingly be addressed because customers seek greener cars. Recent car news told of MINI's CEO, Dr. Key Segler, describing this as "environmental guilt." Ten years ago, a quarter of vehicles in Australia were large cars, but now they are only one in 13. This was evidenced by the replacement of the Holden Commodore by the Mazda3 as the country's most popular car. The Holden Cruze is the next most popular and could eclipse the Mazda3 - many car reviews in Australia say that its engine is considerably more efficient and offers an impressive driving experience.

Australia is one of fewer than a dozen countries that both designs and manufactures cars. In Australia, there are three large automotive vehicle manufacturers - Ford, General Motors and Toyota - and three large truck manufacturers - Volvo, IVECO and Kenworth. In 2010, 242,941 vehicles were produced, of which 60 percent were for the domestic market. The largest export market is the Middle East.

Australia has sophisticated capacity in many areas of automotive manufacturing. Braking systems and propellor shafts are exported to the United States, heating, ventilation and air conditioning products to North America and China, mirrors to North America and Japan, engines to South Korea and anti-theft systems worldwide. Exports grew by almost 22 percent from 1998 to 1999 and 2000 to 2001, although this has since plateaued. Automotive exports are Australia's principal form of exported manufactured goods, exceeding the more traditional items of wine, wheat and wool. The automotive sector generated $26.5bn in 2008.

300,000 people are now employed by the industry, which is four percent of Australia's workforce. Of these, the vast majority are male. Most employment was in New South Wales, with Victoria and Queensland also being large employers. Victoria has the largest number of people employed in manufacturing: 25,000, which was slightly less than 55 percent of the total.

In 1965, sizable tariffs, import quotas and minimum levels of local content were imposed upon automotive production. Production runs were short, leading to few economies of scale. Domestically-produced parts cost more than imports. By the beginning of the 1980s, the ineffectiveness of protection was recognised. Imports quotas were abolished in 1988 and tariffs reduced by 2.5 percent every year so they will be 5 percent by 2015 when they were 45 percent in the 1980s.

The Australian government is providing $5.4bn to the car industry to protect jobs. This year, Prime Minister, Julia Gillard, announced $275 million of investment in the carmaker, GM Holden. GM Holden announced in return that it would invest $1bn in car manufacturing in Australia and produce two "next generation" vehicles within the next 10 years. GM Holden will manufacture cars in Australia until at least 2022.

The Automotive Transformation Scheme will provide $3.5bn from 2011 to 2020 to producers of motor vehicles, their components, tool producers and service providers who can improve environmental effects and workforce skills development. The Automotive Supply Chain Development Programme is providing $20 million over four years to better capabilities in the automotive components sector. The Automotive Market Access Programme will provide $6.3 million to improve the access of automotive component suppliers to global supply chains. The Liquefied Petroleum Gas (LPG) Vehicle Scheme that aims to make LPG vehicles more affordable by giving grants for conversion was recently boosted by $10.5 million.