Australian car buyers are shifting permanently away from large cars, local General Motors unit Holden head Mark Reuss has said.

And Ford Australia will not guarantee to produce a rear-wheel-drive Falcon after 2013, its chief, Marin Burela, told the Sydney Morning Herald (SMH).

The paper said the two US-owned automakers were seeing a growing aversion to large vehicles 'down under', reflecting a global trend.

Holden's Commodore and Ford's Falcon are largely locally-developed and made though Holden began to switch to imported engines in 1986 and Ford is changing from in-house-built I6s to imported US-made V6s.

Reuss said private sales had weakened as had fleet sales to governments and companies. Fleet sales form the bulk of sales of both model lines which are direct rivals.

"Companies are beginning to have a longer lease life for their cars," Reuss told the SMH. "And I think there's probably a different look at the mix of cars in that as well. We'll see some data probably that the mix isn't as rich as we've had in the past."

Australia's car industry - and Holden itself - began early in the 20th century by installing locally made bodies onto imported chassis and a fully-fledged domestic manufacturing industry emerged after World War II, beginning with Holden in 1948. By the mid-70s, full local manufacturers included Holden, Ford, Chrysler and Leyland Australia alongside a number of CKD kit assembly factories for various brands.

Leyland was closed in 1974, Chrysler eventually became Mitsubishi Australia and was closed last year, Nissan closed its plant in 1994 and now only Toyota (which became a full manufacturer in the 1980s after assembling CKD kits since the 60s), Holden and Ford are left.

Toyota is now top exporter (mostly left hand drive Camrys for the Middle East) followed by Holden (Middle East markets for Chevrolet-badged rear -drive Commodore variants). Ford makes only right hand drive cars and its biggest export market is neighbouring New Zealand.

While the Commodore is the country's top selling car,  with healthy exports, putting it in a better position in Australia, its parent company GM is facing a 1 June US government deadline to avoid bankruptcy, the SMH noted.

And, though Ford Australia's US parent is healthier, its suffers from a lack of exports.

The paper said the fact that Ford CEO Alan Mulally has signalled the shift to common production platforms across the world could spell trouble for the unique Falcon which, like the Commodore, is rear-drive.

"If the market clearly says to us there is no significant difference between a rear-wheel drive or a front-wheel drive in terms of consumer preferences, we will respond accordingly," Burela said.

"But I think we are in a very fortunate position that I think some of our competitors maybe aren't in: we do not have to make that call until 2011-2012."

Burela's comments are somewhat ironic because, in the mid '90s, Ford tried selling the front drive, right hand drive US-built Taurus line in Australia and New Zealand (and Japan) but 'down under' buyers shunned the three-litre front driver for the then-current 4.1-litre Falcon models which were roughly the same price as the US import and deemed more suitable for towing large boats and caravans as they were rear-drive. The RHD Taurus lasted only one model generation and was axed by 2000.

Reuss told the Sydney Morning Herald he would struggle to see a day that the Commodore was not a rear-wheel drive. "I think the Commodore name plate is really synonymous with rear-wheel drive," he said.

Both executives said customers still wanted larger vehicles, but car makers would need to make them more fuel efficient and cheaper to run.

"That's why we are concentrating on the operating costs and the efficiency and the environmental impact that large cars have," Reuss said.

However, he said that to arrest a slump in demand he did not necessarily support the push for a "scrappage" policy in Australia, similar to measures introduced in Germany where the government would pay people to junk old cars and buy new ones.

"While it may have created some demand on a short-term basis in different economies … it's a very very expensive proposition, I think.

"And the more used cars you take off the road you get into demand issues. It's not a one-size-fits-all solution."

(Additional reporting by Graeme Roberts)