The new four-cylinder Ford Falcon, developed with millions of dollars of federal government "green car" funding, is not being bought by NSW government departments because it does not meet their environmental guidelines.
The car, trumpeted as a saviour for the Falcon, has also failed to attract private buyers. Ford and its employees have so far bought three times as many cars as retail customers (159 sales compared with 53).
On the same day Ford announced it would axe 440 blue- and white-collar jobs at its Geelong and Broadmeadows plants in Victoria, the Herald can reveal the federal government has bought just two four-cylinder Falcon sedans since the model went on sale three months ago.
This is despite taxpayers contributing $42 million towards the development of the four-cylinder Falcon and the diesel Territory SUV in 2009 - and a further $34 million of federal funding in January this year to ensure Ford's factories remain operational until 2016.
In an unusual twist, the regular six-cylinder versions of the Toyota Aurion and Holden Commodore pass the NSW government's minimum "green car" standards because they have a better pollution score than the four-cylinder Falcon.
The four-cylinder Falcon uses less fuel and emits less carbon dioxide than the Toyota and Holden. It is unclear how Ford missed this crucial target set by the government fleets two years ago.
The federal government does not have such strict requirements but its website urges public agencies to buy "economical, Australian-made" cars.
Only 35 per cent of the federal government's 14,115 fleet vehicles are Australian-made. Just 12 per cent of the 112,000 new cars sold between January and June were built in Australia.
The revelation of the Falcon's struggle comes two months after Ford announced a record financial-year loss of $290 million, and as Falcon sales dip to their lowest in the 52-year history of the nameplate.
The company yesterday said it will cut production from a rate of 209 vehicles to 148 vehicles a day in November.
It follows factory slowdowns and the axing of 250 jobs last financial year, and will bring Ford's total Australian workforce down from 3014 to 2574 staff.
The slow take-up of the four-cylinder Falcon indicates buyers are leaving the large-car market for reasons other than fuel economy.
Ford will make more of its Territory SUV, a more profitable vehicle. But it is unclear how long Ford's factories will remain viable if demand continues to weaken. Ford insists it will meet its obligations to keep them open until the end of 2016.
"We are committed to our local manufacturing operations," Ford Australia spokesman, Neil McDonald, said. "We recently announced a $103 million investment for updated Falcon and Territory models in 2014."
Ford built 37,800 cars in Australia last year, a historical low. Mitsubishi peaked at 41,000 vehicles in 1997 before sales slipped to 11,000 and it shut its Adelaide factory in 2008.
The then boss of Mitsubishi Australia Rob McEniry said they should have closed the factory 10 years earlier.