Although sudden, the GM announcement to close the Vauxhall plant appeared inevitable, says forecaster CSM Worldwide.

CSM says the decision by is another blow for the country’s vehicle manufacturing sector and follows on from bad news earlier this year when Ford announced the closure of Dagenham, BMW disposed of Rover, and Honda abandoned plans to introduce a new B-segment vehicle.

A new alignment of UK vehicle production is under way where the most promising long-term scenarios surround low-volume prestige marques like Ford’s Jaguar and Land Rover,” says Mark Fulthorpe, CSM’s European forecast manager.

Without a major indigenous manufacturer, UK vehicle production relies on a sense of  “Britishness” associated with products that rely on high margins offsetting higher unit costs. “Vehicle production in the UK is quickly centring on niches — shifting away from the mass market.”

He said that, in 1999, the UK produced 1.94 million light vehicles, nearly 12% of the total for Western Europe. The UK produced more vehicles than Italy, yet trailed Germany, France and Spain. The Luton closure will reduce available UK capacity by an estimated 275,000 units and underscores the production issues facing other UK-based manufacturers.

OEM globalisation strategies cause every production site to be scrutinised for cost effectiveness, Fulthorpe says.

Manufacturing costs in the UK are undermining viable low-margin, high-volume programs. Honda, Nissan and Toyota facilities established in the UK during the late 80s and early 90s have shifted or will shift future incremental output to continental Europe.

Additional UK production rationalisations are likely, Fulthorpe thinks.

PSA is evaluating its Ryton plant near Birmingham for future potential and the new BMW Mini is already under cost pressures so its replacement could shift to continental Europe. MG Rover, the last major UK-owned car maker, is forecast to restructure and pare its future vehicle line up as it struggles to survive, according to Fulthorpe.

The impact of this ongoing shift changes the UK production landscape, he says. According to a recent forecast by CSM Worldwide, UK light vehicle production is forecast to slip by 23% to 1.5 million units by 2005 or 9% of total Western European output.