Federal Labor says the prime minister needs to take charge of a government response to reports Holden will pull out of Australia as early as 2016.

Federal Labor is demanding Prime Minister Tony Abbott personally intervene to resolve a dispute between government ministers about more taxpayer support for car maker Holden.

“The whole issue is on a knife’s edge,” opposition industry spokesman Kim Carr told reporters in Canberra on Friday of a possible announcement that Holden will pull out of Australia as early as 2016.

He accused the government of using internal division as an alibi for not making a decision about additional support for the automotive sector.

Senator Carr said Labor had negotiated a new support package with Holden before the September 7 election, but it had not been signed off.

The coalition, on the other hand, had been “incredibly indolent, lazy” about developing a plan for the sector.

“Those actions are coming back to haunt them,” he said.

Senator Carr warned that if Holden stopped manufacturing in Australia it was only a matter of time before the whole sector went.

“The prime minister has to step in, he has to see this nonsense is stopped,” he said of the arguments going on inside cabinet.