Holden the only good news in GM, says premier

One of Holden's finest at the Adelaide street circuit for the first race of the 2009 V8 Championship series

ADELAIDE- Holden is the only good news story in the global auto empire of General Motors with the company's plan to build a new small car from 2010, South Australian Premier Mike Rann says.

Despite announcing cuts to production for 2009 and a decision to axe its afternoon shift, Rann says Holden has given assurances that the new model will go ahead.

"That's going to continue and they are now going out talking to supplier companies, component companies about components for a new car," Rann told ABC radio on Monday.

"We are assured by Holden that is proceeding apace.

"While the rest of the world's car industry was collapsing the only news in General Motors' or Ford's worldwide bailiwick that was good news was about a second car in South Australia."

On Friday, Holden said it would axe the afternoon shift at its Adelaide assembly operations in a move to save thousands of jobs across the auto industry.

The company will switch to a single shift in May with two crews working one week on and one week off on reduced pay to build about 310 cars each day, down from a peak of more than 600.

It comes as sales for Holden vehicles in Australia slumped 20 per cent in the first quarter, while demand in some export markets had crashed by as much as 80 per cent.

Managing director Mark Reuss said the company remained committed to vehicle production in Australia and to building a new four-cylinder car for release in 2010.

But, Reuss said, axing the shift was the best way Holden could protect the jobs of its 3000 workers in Adelaide and also jobs at its component supply companies around the country.

"This is all about saving jobs," he said.

"We think that this will offer the company the best opportunity to prevent job losses and stabilise both the supply base and people's lives."

Asked if Holden's issues suggested parallels with Mitsubishi before it closed its Adelaide assembly operations last year, Rann said Mitsubishi misread the market.

At a time when the whole world was moving to smaller cars because of global warming and higher petrol prices, the premier said, Mitsubishi chose to develop a large, six-cylinder model.

"It made no sense whatsoever," he said.

- AAP