At least one Australian car maker could be forced out of business under a new push to slash automotive tariffs, a local newspaper reported on Friday.

In a submission to the Bracks Review of the car industry, the productivity commission called for auto tariffs to be halved to 5% and other industry assistance scrapped, the Herald-Sun said on its website.

The commission also said a plan by new prime minister Kevin Rudd for a A$500m green car fund would not help lower greenhouse gas emissions.

The commission reportedly said cutting tariffs would cost jobs, but it might not be a bad thing for the industry if a local car manufacturer closed down.

"Were one of the local assemblers to cease operations at some point, the volumes achieved by the remaining assemblers would increase," it said, according to the Herald-Sun.

The commission said each automotive job "saved" by tariffs was costing taxpayers A$300,000.

Slashing assistance to the car industry would add $500m to the Australian economy, it said.

The Herald-Sun said unions and the car industry attacked the report with Australian Manufacturing Workers Union vehicle division secretary Ian Jones saying there would be huge ramifications if a major car company player left Australia.

"It would place the entire supplier sector in jeopardy, and as a consequence, that would place the entire industry in jeopardy," he said.

"To simplistically say that one car manufacturer should leave is an absolute demonstration of ignorance about the way the industry works."

Ford, which recently announced its Geelong engine plant would close, told the Herald-Sun the company was committed to Australia. "We certainly are not going anywhere," a spokesman said.

GM Holden voiced a similar commitment, while Toyota's local operations are going strong.

The Federal Chamber of Automotive Industries told the paper the commission's claim that the closure of one car maker could help other players in the industry was wrong.

The paper said the federal government has sidelined the productivity commission by appointing former Victorian premier Steve Bracks to complete the review on the car industry.

The PM told Parliament this week he was determined to help the Australian car industry lift its international competitiveness and make more fuel-efficient vehicles, the Herald-Sun noted.

Mitsubishi ended local car production in Australia last March. Nissan pulled out in 1992 and Leyland Australia was axed by its UK parent back in 1974.