Sluggish Germany makes General Motors see red

General Motors yesterday underlined the fragility of the European car market by warning that it may miss its target of break-even this year and run up a loss of $218m (£138m).

The world's biggest carmaker lost $549m last year after posting a $767m loss in 2001 as the weak German economy and poor sales at Opel, its leading European brand, took their toll.

Vauxhall, GM's British arm, by contrast cut its 2000 losses of £192m to £101m in 2001 and analysts expect it to have reduced further last year. But the west European car market, including Britain where sales hit a record last year, is expected to decline this year to 16.3m units from 16.8m in 2001.

Last year GM's west European sales fell, giving it a market share of 9.4%, and the group's sales in the US have flagged despite discounts, with Rick Wagoner, chief executive, forecasting an overall market of 16m-16.5m this year, compared with 17.1m in 2002.

GM Europe, which has initiated savage cost-cutting at Opel and Vauxhall, hopes to recover with 70 new products over five years from 2002 and said its sales rose 4% in January on a year earlier.

Other groups, including Porsche and BMW, warned of pressure on sales. Porsche has cut output of its 911 and Boxster models by "several thousand" in response to curtailed demand and economic worries, notably among Wall Street bankers.