Industry Minister Christopher Pyne is hopeful a deal to save Holden's carmaking plant in Adelaide may be struck but says there's still a long way to go.
Mr Pyne will meet with Holden managing director Mark Bernhard in Canberra next week to discuss a proposal from Guido Dumarey and his company Punch Corporation to take over the plant.
"The signs are promising and I'm encouraging Punch and Holden to work through the issues," he told a business lunch in Adelaide on Friday.
Holden, which has not yet received a formal offer from Punch Corporation, remains on track to close its assembly operations by the end of 2017.
South Australian Premier Jay Weatherill has raised concerns about site contamination and questioned whether General Motors would be willing to relinquish its intellectual property.
Mr Pyne said Punch had a track record of revitalising automotive production plants but acknowledged there were challenges that needed to be overcome.
"While I'm optimistic, we also need to be realistic," he said.
"There's a long way to go and much work to be done before anyone can be ready to sign a deal."
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