CSIRO (Commonwealth Scientific and Industrial Research Organisation) scientists working on lightweight alloy parts hope to cut 400kg to 500kg off the weight of cars, making for big savings on petrol consumption.
They have found by using aluminium and magnesium alloys, about 27 per cent of weight can be cut from the average family car weighing about 1250kg.
CSIRO spokesman Sam Tartaglia said considerable savings could be made on the costs of fuel as well as CO2 greenhouse gas emissions, simply by driving lighter, safer vehicles.
US and Australian car makers were looking at the products, some of which had the potential to improve safety because they had the potential to better absorb impacts.
"An example is that BMW uses a magnesium block and they took 10kg off the weight of the engine alone," Mr Tartaglia said.
"It's obviously a major gain and also lowered the car's centre of gravity by 25mm so it improved handling."
With oil prices at historic highs and global concern about climate change, car manufacturers' focus was shifting to lightweight, low-fuel consumption cars.
Barrie Finnin, former general manager for alloy technologies with CSIRO materials science and engineering, said the magnesium and aluminium alloys created car parts that were cost-competitive with conventional components.
"Lighter cars use less fuel because they need less energy to start and stop than heavier cars," Mr Finnin said.
The Federal Chamber of Automotive Industries estimates Australian exports of motor vehicles and automotive components were worth $4.85 billion in 2006.
This made the automotive sector Australia's largest manufacturing export earner, accounting for higher export earnings than traditional products such as wheat, wool and wine.
Close to 70,000 people work in the sector, many of them in smaller companies producing components.