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August 22, 2016

Citing Brexit, GM’s Opel reduces working hours at two UK-focused assembly plants

General Motors' European unit Opel/Vauxhall is scaling back working hours at two German plants due to lower demand for the Corsa and Insignia models, citing Britain's recent 'Brexit' vote to leave the European Union.

General Motors ‘ European unit Opel/Vauxhall is scaling back working hours at two German plants due to lower demand for the Corsa and Insignia models, citing Britain’s recent ‘Brexit’ vote to leave the European Union.

“We can confirm that there will be short-time work in the plants in Rüsselsheim and Eisenach during the course of this year,” Opel said in a statement. “We cannot confirm the exact number of days. This will depend heavily on the sales volume of the Insignia and the Corsa in the UK. For both vehicles, the UK is the biggest market. The Brexit situation is an issue for everybody who does business in and with the UK at the moment and we already announced last month that there will be an impact on our European financial performance if the value of the pound remains at its current level for the rest of the year.”

The UK is GM Europe’s biggest market for both car lines – especially the Corsa – which are popular private and company purchases. SMMT data to the end of July, the latest available, shows the Vauxhall-badged Corsa was the second most popular seller in this market, with 5,606 sales, behind the top selling (and also imported from Europe) Ford Fiesta (7,990 registrations). For 2016 year to date, the Corsa had 47,962 sales, again second only to the Fiesta (71,823). The larger Insignia, a popular fleet model, is nearing the end of its model cycle and no longer in the top 10. Total UK Vauxhall sales, meanwhile, rose 16.8% last month to 19,733 but dipped 4.2% year to date to 152,680, the SMMT data showed. Vauxhall’s market show rose to 11.05% last month, from 9.47% a year ago. YTD share was 9.55% versus 10.24%.

GM last month said it may need to cut costs in Europe to offset up to $400m of potential additional costs triggered by the Brexit vote which has seen the value of the pound deteriorate against the euro making components imported from Europe to the UK [for assembly of Astra five-door hatchbacks and estate cars for sale in UK and Europe] more expensive.

LMC Automotive analysts said in a report last month GM was the automaker most likely to cease production in Britain if costs rose at its plants in England. The automaker a decade ago ended production of the Vectra [the Insignia’s predecessor] at Luton and demolished the factory buildings, leaving only its joint venture van plant making vehicles on the Luton site. Astras are assembled, with a high proportion of components – such as engines – imported from Europe, at Ellesmere Port; the rest of the UK Vauxhall range is imported mainly from Europe and South Korea.

GM Europe has factories in Zaragoza, Spain, Russelsheim and Eisenach, Germany, and Gliwice, Poland.

A Vauxhall spokesman told just-auto Opel was being prudent by anticipating a potential fall in September industry volume due to falling consumer confidence in what is expected to be the year’s biggest sales month [a sales-spurring number plate identifier changes each 1 September in the UK – ed].

He noted the Insignia (images of the full 2017 redesign would be released in December with the car due to be launched at Geneva next March) was nearing the end of its life cycle while sales in the model line’s D-segment were also slowing overall. And some B-segment decline was also expected, affecting sales of the Corsa model line which was also being affected, at its cheaper end, by the Korean-built Opel/Vauxhall Viva “stealing a few away”.

“We’re getting ready for any potential fall-off in sales, ” the spokesman added. “It’s ‘be-ready’, basically.”

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