The move follows the axing of about 200 jobs in February, split between casual workers and those on fixed-term contracts, and comes despite a $275 million Federal and state assistance package for GM Holden that was announced in March.
The local car maker says the jobs will be shed via a voluntary redundancy program.
"Due to a reduction in demand for our Australian-built cars led by a sustained high Australian dollar, combined with one of the world’s most open and competitive car markets, we have a need to reduce the size of our workforce at Holden Vehicle Operations (HVO) in Adelaide by approximately 170 positions through a voluntary separation program," said the company in a statement.
"This move will better align production with customer requirements and projected future volume and is a necessary step to ensure that we are able to continue to have a viable manufacturing operation in Australia for the next decade."
Holden earlier this year accelerated the speed of its production plant, improving efficiency and reducing the product cycle from 104 seconds to 60 seconds.
Daily production is dropping from about 460 vehicles per day to 400.
Sales of the Holden Commodore have continued in the same direction as the rival Ford Falcon, dropping 27 per cent year on year to September 2012. Holden's other locally built model, the Cruze small car, has also experienced a double-digit fall, by 11 per cent.
The long-term future of the Holden Commodore remains uncertain even ahead of an all-new model that goes on sale in 2013.
Holden confirmed expectations at the recent 2012 Sydney motor show that it would build the second-generation Cruze from 2015, though a second local model it has committed to until at least 2022 as part of the $275m co-investment program remains a mystery.
The job cuts announcement comes in a week when local car makers have been faced with the prospect of halting production temporarily after a major local parts supplier closed its factories indefinitely.