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Monday, 9 April, 2001, 14:21 GMT 15:21 UK
General Motors gloomy on Europe
GM logo and car
General Motors is the latest company to warn of a slowdown in Europe.

The world's largest car maker has said that signs of a downturn in European new car sales will inhibit its efforts to return to profitability.

There are a couple of markets having trouble coming back

Mike Burns
GM Europe
In an interview with the UK newspaper the Financial Times, Mike Burns, president of GM Europe, said that 2001 would not be an easy year in Europe.

"There are a couple of markets having trouble coming back," Mr Burns told the FT. "Germany is continuing to struggle."

A spokesman for GM Europe told BBC News Online that Mr Burns believes total car sales in the region could fall by nearly 6% in 2001.

"He is saying that we should be prepared for that," said the spokesman.

In Europe, GM sells cars under a range of brands, including the UK's Vauxhall, Adam Opel in Germany and Saab of Sweden.

European decline

The Association of European Automotive Manufacturers is due to report its latest figures for new car registrations on 13 April.

The level of new registrations is seen as an indicator of economic confidence.

In February the association reported a fall of nearly 8.7% in new passenger car registrations, compared with February 2000.

The cumulative figure for the first two months of 2001 shows a decrease of 4.4%, relative to the same period in 2000.

The association also said that all Western European countries, apart from the UK, showed a decrease in the February 2001 car market.

The UK seems to be proving itself an anomaly. A big increase in British sales for March, announced last week, has convinced the motor trade that it could beat its 1989 record of 2.3 million sales.

Preliminary figures for March

The GM spokesman said that preliminary figures for Europe as a whole show a drop of more than 8% in passenger car registrations for March.

At GM registrations only fell by 5.1% last month, showing that the company has beaten the overall market, according to the spokesman.

Mr Burns also told the FT that the group was reorganising its national sales companies across its European brands to cut more costs.

The reorganisation involves consolidating back-office functions, such as accounting, human resources and purchasing, across the different GM units in Europe.

But the spokesman added that the public-facing offices for each brand would remain separate.

Vauxhall closure

At the end of last year, GM decided to close one of its Vauxhall car plants in Luton, Bedfordshire, as part of a Europe-wide programme of cutbacks.

Vauxhall plant in Luton
GM will close one of its Vauxhall plants in Luton
In February, GM then announced it would build its new Vectra model at its Ellesmere Port plant in Cheshire, guaranteeing 200m investment and safeguarding more than 1,200 jobs.

GM is expected to unveil losses in Europe when it releases its first quarter results later this month.

In the US the investment bank Goldman Sachs has lowered its profits forecast for GM's US operation by about 3%.

The downgrade follows GM's plans to recall 6,000 sport utility vehicles because of safety concerns.

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