Slump in sales raises fears over Vauxhall’s UK future

Fears over the long-term profitability of Vauxhall’s UK operations were raised this week following an extended Christmas shutdown.

Fears over the long-term profitability of Vauxhall’s UK operations were raised this week following the announcement of an extended Christmas shutdown at its Luton plant.

Parent company General Motors disclosed this week that instead of the usual week-long Christmas stoppage, the Luton plant would be closed for four weeks. Vauxhall, which produces Vectras at Luton, is alone among UK car makers in announcing an extended shutdown. The move is the result of worse-than-expected sales figures.

During October, Vauxhall’s UK sales were down nearly 2,000 units on the same period in 1999, at 18,828, despite total private car registrations rising by 14%. At the same time, GM’s European operations swung from a $32m profit to a $181m loss during the third quarter.

Dr Peter Wells, automotive researcher at Cardiff Business School, said: ‘Vauxhall is struggling to maintain market share in the UK. The company has competent but unexciting products that have failed to become leaders in any of their segments. That is at the core of its problem.’

Vauxhall predicts the fourth quarter will be equally difficult. Chairman Nick Reilly said there would be little help from pricing or volume growth.

A senior automotive analyst at Merrill Lynch said: ‘With the euro at its present level making cars in the UK has become just too costly.’

Vauxhall has so far insisted that the Vectra replacement, due at the end of 2002, will be built at Luton. Late last month the company announced that it was to transfer up to 500 workers from its Luton and Merseyside assembly operations to a new van assembly plant, run as a joint venture with Renault, which will also be based in Luton.

Despite concerns about the strength of the pound, most of the 80,000-unit van production is due to be exported. The plant is expected to start production at the end of January.