THE Ford Falcon will continue to be made in Victoria until at least 2016.
A $103 million production upgrade has secured its immediate future and that of 3500 workers.
With the state and federal governments pitching in funds, US-based Ford is upgrading its flagship Falcon range after sales slumped by more than a third last year.
Acting Victorian Premier Peter Ryan said the announcement secured the immediate future of the Falcon and the 3500 jobs at Ford's Geelong and Broadmeadows plants.
The news comes after speculation about the long-term future of the nation's car manufacturing industry.
Prime Minister Julia Gillard said her government was determined Australia would continue to make cars.
Meanwhile, the federal and South Australian governments are close to clinching a deal to ensure Holden continues to design, engineer and build cars in Australia.
Shutting down Holden's local operations is one option being considered by parent company General Motors.
But South Australian Premier Jay Weatherill, who's had talks with GM chiefs in Detroit, said his government was urging the company not to pursue that option.
The premier said the two governments were optimistic about finalising a funding package that would ensure Holden's future in Australia and also the future of local component suppliers.
Holden chairman and managing director Mike Devereuz has described the talks as very positive and productive.
