Holden has welcomed the announcement by Australia and the United Arab Emirates to begin negotiations on a free trade agreement between the two markets.

Holden Chairman and Managing Director, Denny Mooney, said an agreement would offer the Australian automotive industry an opportunity to grow already strong export sales to the United Arab Emirates.

"The United Arab Emirates is the third largest market for Holden in the Middle East and is expected to continue to represent more than 10 per cent of our total export volume to the region," Mr Mooney said.

"Australian automotive exporters need to ensure our vehicles are priced as competitively as possible in regions like the Middle East where there is continued strong domestic growth.

"As countries like the UAE seek to negotiate similar deals with other countries, Australia has an opportunity to secure long-term preferential trade relationships that will benefit the entire industry."

In the Middle East last year, Holden achieved record wholesale vehicle sales of 23,511, including a record number of 12,596 long wheel based Caprice models.

Holden vehicles play an important role in General Motors' product portfolios around the world.

Holden exports left hand drive Commodore, Monaro, Statesman and Caprice models to the Middle East, where they are sold as Chevrolet Lumina, Lumina Coupe, Caprice and Caprice Royale.

Within the Middle East, Holden also exports to Saudi Arabi, Bahrain, Oman, Syria, Lebanon, Qatar, Kuwait and Iraq.

Last year Holden also set a new all-time export record of 52,372 vehicles.