Joe Hockey believes the free trade agreements with Australia's three major Asian trading partners will assist in the shift away from car-making.
Addressing the Automotive National Summit in Canberra, the treasurer says the FTAs with China, Japan and Korea offer huge opportunities "right on our doorstep".
Under the agreement with Korea, the eight per cent tax on Australia's auto part exports was eliminated.
With China, the 10 per cent tax on car engines will become history within four years, as will other tariffs of up to 25 per cent on other parts.
And under the deal with Japan, duty-free access for auto parts will continue.
"Additionally, the elimination of tariffs on new motor vehicles coming here will lift our auto retailers and service networks," the treasurer said in a speech on Wednesday.
But Mr Hockey acknowledged that the transition is not easy as the three big makers - Holden, Ford and Toyota - pull out of Australia.
Geelong, for example, had been powered by the car industry for a long time. But it has diversified in recent times.
The Victorian city had shifted into industries that will provide more opportunities and employment, such as healthcare, advance manufacturing, tourism and technology.
"Today it is a city of innovation, powered by not one but many sources," he said.
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