Car maker Holden will axe 400 jobs from its South Australian operations.
The company says 100 positions will also go at its product development workforce in Melbourne.
It says the cuts are the result of challenging market conditions and a fall in demand for its locally built Cruze small car.
"We - every single one of us - are dealing with historic structural changes to the Australian economy", Holden managing director Mike Devereux said.
"This is a very difficult decision because people and their families are involved," Mr Devereux said.
News that makes sense
Your trusted source for staying up-to-date with the world around you. Get free daily news updates and analysis, straight to your inbox.
"These are hard working Australian men and women.
"A workforce reduction is always the last resort."
Holden said workers would be offered voluntary redundancy packages and the company expected the restructuring to be complete by August.
The measures would reduce vehicle production levels from 400 a day to 335 a day. Holden said that would align production levels with current market demand.
The job cuts come after Holden was given $275 million in federal and state government funding last year to develop two new cars in Australia and to ensure the future of local manufacturing until at least 2022.
Mr Devereux said much of Holden's problems were out of its control but declined to directly respond to questions on whether or not the assembly plant in Adelaide was under threat of closure.
He said the strength of the local dollar made manufacturing in Australia 60 per cent more expensive today than it was 10 years ago.
Workers leaving the plant on Monday declined to comment to the media.
They were told of the job cuts just an hour before the official announcement.
