Lower
car prices, stagnant sales and excess factory costs will produce a loss for General
Motors U.K.-based Vauxhall unit this year, chairman Nick Reilly said.

"We lost money last year" and "it’ll be quite difficult to get
back into profit this year," he said in an interview with Bloomberg News.
"We certainly expect a much better result next year."

Bloomberg said GM lost $86 million in Europe in Q1 2001, compared with a profit
of $221 million in Q1 2000, and lost $676 million in Europe last year. The U.K.,
where Vauxhall has a 13.5 percent market share, second only to Ford, is the
car maker’s second-largest market in Europe after Germany.


Strategic
Review-


General
Motors


Reilly told Bloomberg News that Vauxhall’s market share would change little
this year while the average net price of its vehicles has fallen by about four
percent since last autumn after car makers came under government pressure to
cut prices.

Vauxhall recently shocked the UK car industry and the government by announcing
the closure of its almost century-old Luton Vectra factory next March.

However, once the fuss died down, workers accepted transfers to other GM plants
(van assembly next door and a second car assembly plant in another part of the
country) and various early retirement packages. "We managed to conclude
it without any forced redundancies," Reilly told Bloomberg.

He saw a brighter future for the UK operation. Closing the old and not very
efficient Luton car plant and the start of Vivaro commercial van production
will improve results from next year, Reilly added.

The Vivaro is a joint venture with Renault SA to replace the current Renault
Trafic and Vauxhall Movano models.

Vauxhall will produce 86,000 vehicles next year, including Renault-badged Trafic
versions, Reilly told Bloomberg News.

He expects the U.K. market to either remain static or grow slightly from last
year’s 2.25 million cars.


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