GM forced to cut production in Europe

08 October 2008

The US auto market, hit hard by a lack of car finance and a drastic fall in demand for new cars across Europe due to the global financial crisis, has led General Motors announcing cutback in production at most of its 10 manufacturing plants in Europe and extending temporary plant shut downs at its UK plant in Luton.

Analysts say the financial crisis has prompted people to hold on to their money and spend less on buying cars in view of the uncertain economic outlook and fears of job losses.

Reports say that it is too early to say if the European closures are temporary or become a permanent feature as the word's largest auto maker, which is currently in the midst of an extensive restructuring, stops production or cuts shifts for 10 to 21 days in response to flagging demand of its Opel, Vauxhall and Saab cars.

It plans to cut its European output by 40,000 vehicles or a 2.3 per cent of its vehicles manufactured in Europe this year than originally planned.

GM closed its Opel plant at Bochum in Germany, which makes Astra and Zafira models as well as axles and gearboxes, for two weeks and will cease production for three weeks at its Eisenach plant that makes the new Opel Corsa compact.

Its Vauxhall factory in Ellesmere Port, which manufactures the Vauxhall Astra vans and Vauxhall Astra five-door cars will stop production for 14 days to reduce its output by 9,000 cars so as to match production to the current demand.

The Vauxhall factory produces 120,000 vehicles a year, out of which 46 per cent is exported to other European countries like Germany, Spain and Italy while its van plant in Luton, which manufactures the Vivaro will close for 10 days this month. Two thirds of its production at Luton is for the exports market.