The hole in the pension fund at Vauxhall more than doubled last year to £349m ($US 399 million), prompting the UK arm of General Motors to increase its contributions to the fund, the Financial Times (FT) said.
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According to the paper, the hole in the pension fund at the end of last year was equal to 31% of the value of future pension payments, significantly worse than the average of about 20% under-funding at UK companies.
However, Vauxhall reportedly said it remained committed to its final salary pension scheme, and that recovery in the stock market this year has already cut the deficit – measured under accounting standard FRS 17 – by £90 million, the FT reported.
The newspaper noted that several other car makers have increased the contributions to pensions required by workers, while Honda’s Swindon factory has told employees they will need to work an extra two years to qualify for a full payment.
The FT reported that Vauxhall, which published its accounts for 2002 on Friday, said: “We continue to meet and will continue to meet all our liabilities.” The company voluntarily increased its pension contributions to 10% of pay last year from 7.5% in an attempt to fill the hole, the report added.
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By GlobalDataAccording to the Financial Times, Vauxhall missed its target of returning to profitability under its “Project Olympia” cost-cutting and new model plan last year but succeeded in halving losses to £51.4m before tax. But, the paper added, GM insisted the loss should be ignored, because the close ties between Vauxhall, Swedish subsidiary Saab and Adam Opel, the German business, meant the accounts “do not give any real indication of how the company is performing”.
The FT noted that GM has been struggling in Europe because of a fierce price war and slow sales in France and Germany, and admitted last month that it will miss its target of limiting European losses to $200 million.
The paper said Vauxhall has succeeded in increasing its market share this year, after a small decrease last year – figures published on Thursday by the Society of Motor Manufacturers and Traders showed the company took 12.6% of UK sales in the year to October, up 0.2% though Vauxhall’s October sales fell 3.7% compared with the previous year, worse than the market’s 1.4%, and the Corsa lost its brief position as best-selling car to the Focus.
