Holden has announced that it will lay off another 500 workers in response to falling demand and the high Australian dollar.

The company says it needs to cut production from 400 to 335 cars a day to meet falling demand, with cheaper imports drawing customers away from the carmaker's locally made Cruze and Commodore models.

Staff were told this afternoon that production workers in South Australia and vehicle development employees in Victoria would be the target of the job cuts.

Holden's managing director, Mike Devereux, told a media briefing that 400 of the redundancies would be from its factories in Adelaide, with another 100 in Victoria.

Mr Devereux said the redundancies would be voluntary and were a last resort after trialling non-production days to cut output, and increased advertising, lower pricing and new models to boost sales.

"Many of the issues driving today's announcement are things that are beyond the control of the people that work here, they're beyond the control of Holden's leadership or, even more broadly, manufacturing in this country," he said.

"The Australian automotive industry is heavily trade exposed, that is no secret - the appreciation of the Australian currency means that making things in this country is 60 per cent more expensive than it was 10 years ago."

Trade wars

Australia's automotive industry The Government's New Car Plan involves $3.4 billion in support for the industry

The Government's New Car Plan involves $3.4 billion in support for the industry The Government also provides grants to Ford and Holden to encourage innovation

The Government also provides grants to Ford and Holden to encourage innovation More than 1 million new vehicles are sold annually

More than 1 million new vehicles are sold annually Toyota has the lion's share of the market, selling 18 per cent of new vehicles hitting the road.

Toyota has the lion's share of the market, selling 18 per cent of new vehicles hitting the road. Next is Holden with 12.5 per cent, with Ford on 9 per cent.

Next is Holden with 12.5 per cent, with Ford on 9 per cent. In the passenger car market, imports outsell locally-produced vehicles by nearly 4 to 1.

In the passenger car market, imports outsell locally-produced vehicles by nearly 4 to 1. Australia's vehicle and components exports are worth $3.25 billion annually.

Australia's vehicle and components exports are worth $3.25 billion annually. The Middle East (44 per cent) is Australia's biggest automotive export market. All figures as of 2011. Read more here.

Mr Devereux lays the blame for much of the Australian dollar's appreciation squarely at the feet of nations, such as the US and Japan, that have been deliberately devaluing their currencies.

"Importantly, the currency plays being made by other countries mean that were are not competing on a level playing field, not even in our own backyard," he argued.

"Not only are we challenged to compete locally, but high volume export markets are largely unattainable due to the value of the Aussie dollar and the measures that other countries take to fiercely protect their own automotive industry."

When quizzed about the future survival of Holden's Australian production and design operations, Mr Devereux said the company was committed to staying in Australia but could offer no guarantees.

"I am not a fortune teller. I cannot predict the future. I do focus on building world-class products... but there are no guarantees in life or, frankly, in the automotive business," he said.

He says staff will be offered financial counselling and outplacing services.

"This is a voluntary separation program, and I have to tell you it is not a decision we have taken lightly," he said.

Deal 'breached'

Space to play or pause, M to mute, left and right arrows to seek, up and down arrows for volume. Watch Duration: 6 minutes 16 seconds 6 m SA Premier Weatherill talks to 7.30 about the announcement

Holden cut its workforce by about 170 late last year citing a strong Australian dollar and slow car sales.

The carmaker was last year granted a $275 million State and Federal government assistance package after concerns it would withdraw its Australian manufacturing bases.

Holden also revealed last week it has received more than $2 billion in federal subsidies in the past 12 years.

The company employs more than 4,000 workers in Australia.

South Australian Premier Jay Weatherill says the job cuts breach an agreement Holden has with the State Government.

He last year's assistance package had minimum employment levels attached.

"I've also met with the company and made it very clear that I regard this decision today as completely inconsistent with the agreement that was reached with the South Australian Government about investing in the future of Holden," he said.

Gary Gray, the Acting Federal Minister for Climate Change, Industry and Innovation, says the latest job cuts are disappointing.

"Our thoughts are with the affected workers and their families during this difficult time," Mr Gray said.

"Holden is committed to honouring workers' entitlements and assisting affected workers find new employment.

"In addition, the Gillard Government has a range of measures available to assist workers, including intensive employment support under the Automotive Industry Structural Adjustment Program."

Opposition industry spokeswoman Sophie Mirabella says the Coalition is disappointed to hear the news and its thoughts too are with the affected workers.

Ms Mirabella says the announcement raises serious questions about Labor's approach to providing financial assistance to the car industry.