Car sector vital to the state: Vic govt

A Productivity Commission report that recommends ending taxpayer support for the automotive sector fails to acknowledge its importance to Victoria's economy, the state government says.

Manufacturing Minister David Hodgett says the automotive sector has a future in the state and the government will not abandon the 25,000 Victorian workers.

"We take issue with a number of proposals in the Productivity Commission report that fail to acknowledge the importance of the automotive sector to the Victorian and national economy," Mr Hodgett said in a statement.

The commission, in a position paper released on Friday, recommended that all government assistance to the sector end by 2020.

But the Victorian government argued in its Productivity Commission submission that the Commonwealth should provide financial support to existing manufacturers at present levels for 10 years to enable industries to become more competitive.

The Victorian government also argues in its recent submission to the Commonwealth's review of the Victorian economy that the federal government must ensure Toyota remains viable.

Mr Hodgett says Toyota employs 4200 people directly and there are more than 25,000 Victorians employed in the vehicle making sector, including the supply chain and components.

He says the loss of skills from the automotive sector would have flow-on effects for defence, rail, mining, aerospace, food and heavy vehicles which would be very significant, to both the Victorian and Australian economy.

Mr Hodgett says the state government will continue working with the Commonwealth and the automotive industry to address the issues.

A second automotive industry roundtable will be held with key stakeholders on February 13, led by Premier Denis Napthine and Mr Hodgett.