Brexit: Thousands of Vauxhall jobs at risk as owner General Motors takes $400m loss from pound value crash

US car giant prepared to 'take whatever action is necessary' after taking $400m hit from the pound's value crash

Ben Chapman
Wednesday 26 October 2016 13:36
Comments
The proposed sale by General Motors of Opel/Vauxhall to Peugeot-Citroen is causing worry for many workers
The proposed sale by General Motors of Opel/Vauxhall to Peugeot-Citroen is causing worry for many workers

Thousands of jobs are at risk after Vauxhall's US owner warned it could cut production in Europe, after taking a $400m from the Brexit vote.

“We are prepared to take whatever action is necessary to put Europe on the path,” GM’s finance chief, Chuck Stevens said.

GM has already lost $100m dollars from the fall in the pound's value and expects a further Brexit-related hit of $300m in the fourth quarter. It said it had been on track to break even this year before the referendum.

How the pound has struggled since Brexit

The Detroit-based car maker will decide in the coming months whether to continue making Vauxhall Astras at Ellesmere Port in Cheshire. Vauxhall employs 4,500 people in total at its Ellesmere and Luton plants and its head office.

“The pound sterling has deteriorated further, which creates another headwind for us,” Stevens said. “Breaking even this year is going to be very challenging.”

GM already raised UK prices by 2.5 per cent on 1 October and is looking to cut costs, Stevens said.

Asked if the company was considering permanent restructuring measures in Europe, Mr Stevens said: “Yes. We’ve been spending a lot of time, obviously, with the team in Europe. And I look at the situation in the UK as, you know, a speed bump on our path to where we want to take the business.”

The company said in July that the UK’s plan to exit the European Union could cost it $400 million in this year’s second half, as an expected drop in demand hits its Vauxhall brand.

So far British sales have held up “pretty well” since the referendum, Stevens said, adding that he expects future headwinds. “There is a lot of uncertainty on how (the impact of the Brexit vote) will play out over time”, he said.

GM has already cut working hours at German factories making Vauxhall Corsa hatchbacks and Insignia saloons, for which the UK is the biggest market.

GM announced record profits and sales worldwide after its US business performed well.

Nissan will announce next month whether it will produce one of its best-selling cars in the UK, after it had threatened to leave the country unless it received “compensation” for tariffs incurred to import cars into the EU.

The pound continued its slide last week as Prime Minister Theresa May faced tough opposition at the EU summit.

At her first EU summit, May reiterated her hope that Britain and the European Union would have a “mature and cooperative” relationship after Britain exits.

Register for free to continue reading

Registration is a free and easy way to support our truly independent journalism

By registering, you will also enjoy limited access to Premium articles, exclusive newsletters, commenting, and virtual events with our leading journalists

Please enter a valid email
Please enter a valid email
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Must be at least 6 characters, include an upper and lower case character and a number
Please enter your first name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
Please enter your last name
Special characters aren’t allowed
Please enter a name between 1 and 40 characters
You must be over 18 years old to register
You must be over 18 years old to register
Opt-out-policy
You can opt-out at any time by signing in to your account to manage your preferences. Each email has a link to unsubscribe.

Already have an account? sign in

By clicking ‘Register’ you confirm that your data has been entered correctly and you have read and agree to our Terms of use, Cookie policy and Privacy notice.

This site is protected by reCAPTCHA and the Google Privacy policy and Terms of service apply.

Join our new commenting forum

Join thought-provoking conversations, follow other Independent readers and see their replies

Comments

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in