The former boss of Ford Motor Co in the United States, Jacques Nasser, said Australia would be shortsighted if it did not support the automotive industry as it goes through tough times.
He said he was not calling for unqualified indefinite support, but said it was a strategic industry which should remain viable.
Mr Nasser and trucking magnate Lindsay Fox were being honoured in Melbourne by the American Australian Association for their contributions towards the Australia-US relations.
Mr Nasser, who is chairman of global miner BHP Billiton, said Ford, along with Toyota and General Motors, had invested billions of dollars in Australia and did not want to leave.
'We asked these companies to come here and I think it would be shortsighted not to support them during what is a very traumatic period in the world,' he told reporters.
'My view is we have this industry, if it wasn't here would we raise our hands to put an automotive industry here, maybe not.'
He said talk of growing the industry but expanding exports would not work.
'You have to walk before you can run,' he said.
'There is a lot of excess capacity overseas in the automotive industry - there are specialised exports you can do but I wouldn't base it primarily on exports.
'You don't have countries around the world saying come in from Australia and compete with our industry' - most countries are protectionist about their automotive industry.'
Last month the federal government announced that $34 million in funding to keep Ford in Victoria until 2016 would create an additional 300 jobs.
Prime Minister Julia Gillard said the resources boom and the high Australian dollar were putting pressure on manufacturing and the industry needed government assistance to survive.
Opposition leader Tony Abbott said a coalition government would provide assistance to the local car industry on a similar scale to the aid given by the former Howard government.
The Howard government's Automotive Competitiveness and Investment Scheme (ACIS) started in 2001 and provided around $5.5 billion in assistance in the period to 2010.
