Vauxhall owner warns of losses

The parent of car maker Vauxhall today warned it would fall into the red in the first three months of this year after sales and prices in North America took a dive.

General Motors (GM) said it expected to report first quarter losses of about 1.50 US dollars (78p) per share in 2005, compared with a previous target of break-even or better. The company said it was reducing its full year earnings target from up to five US dollars (260p) a share to “one or two” US dollars (52p-104p) per share.

The world’s biggest car maker said it had revised its targets downwards to reflect lower North American sales and production volumes, lower prices and a more car-based sales mix.

GM employs 7,351 people in the UK. It makes Vauxhall Astras for the UK and Opel Astras for continental Europe at its plant at Ellesmere Port.

The group also has an IBC commercial vehicle plant at Luton, where it makes the Vauxhall Vivaro, and import operations for Saab and Chevrolet at Maidenhead and Luton respectively. It ended Vauxhall car production at Luton in March 2002.

North America is the automaker’s largest market, but its US market share has dwindled in the face of gains by Asian rivals. GM’s profit fell 37% in the fourth quarter and the group had said it expected a rough start this year.

GM chairman and chief executive Rick Wagoner said the company was facing significant challenges in North America.

However, he said the rest of the group’s automotive businesses and financial services business GMAC were running in line with, or ahead of, its expectations.

He said GM continued to progress with its major structural cost reduction moves in Europe, including staff reductions, while market share and revenues in the region were improving, although he did not give further details.

The group’s share price tumbled to its lowest level in more than a year in morning trading in New York.

GM’s previous first-quarter guidance was based on North American production volumes of 1.5 million vehicles. Since then, production schedules have been cut by about 70,000 units.

GM said it was encouraged by the “building momentum” of some recently introduced vehicles, including the Chevrolet Equinox, Pontiac G6, Buick LaCrosse and Chevrolet Cobalt, and by the product launches scheduled for this year.

“Great cars and trucks are the key to success in this business and so remain our top priority,” Mr Wagoner said.