General Motors has warned that it might cut output further in Europe as a result of Britain's vote to leave the EU, as the uncertainty it has caused damps demand for new vehicles.
The US carmaker vowed to "take whatever action is necessary" to offset the impact of the Brexit vote, which cost it $100 million (€91.7 million) in the past three months due to currency shifts, taking the shine off a record quarter that saw its net income more than double to $2.77 billion.
GM is struggling to turn a profit in Europe, hampered by fierce competition and tight margins, in contrast with the US where demand for large SUVs and trucks has driven profitability. The fall in sterling and softening demand will cost the company $300 million in the final three months of the year, GM warned yesterday.
Chief financial officer Chuck Stevens said GM had been on track to make a profit in Europe before the vote and might now cut production to stem losses.
“We are prepared to take whatever action is necessary to put Europe back on the path,” he said.
Vauxhall brand
The UK, where it trades under the Vauxhall brand, is GM’s largest market in Europe. It has raised prices 2.5 per cent in the UK to offset the impact from a weaker sterling but Mr Stevens warned that across its European operations, “break-even for the year is clearly at risk”. He told the
Financial Times
there was a “a lot of uncertainty on how [the impact of the Brexit vote] will play out over time”, but added that UK sales had “held up pretty well” since the vote.
The company has already cut output at two European plants that produce cars popular in the UK. In August, it shortened working hours at sites in Germany producing the Corsa and Insignia for the rest of the year. But Mr Stevens insisted it was "too early to say anything specific about capacity reductions" in the UK or mainland Europe.
GM is due to decide in the coming months whether to produce the next-generation Astra car in the UK or Europe.
– (Copyright The Financial Times Limited 2016)