GM Europe plants plans non-production days

General Motors is scheduling several non-production days this month at two of its European plants to avoid building up excess inventory if the eurozone debt crisis begins to hit car sales.

Nick Reilly, who heads GM in Europe, said that the US carmaker had scheduled three non-working days at its plant in Gliwithanskce, Poland and “four or five” at its factory in Zaragoza, Spain.


The US carmaker’s European Opel and Vauxhall brands have been reporting rising sales and market share this year, and many of its European plants have been working overtime. Mr Reilly said that GM’s order book in Europe was up for September.

However, he said, GM was “being very careful about our production” because of the crisis in the eurozone, which it and other automakers fear could hit their sales later this year.

“We are erring on the side of being short on inventory rather than long”, GM’s European boss told reporters at the Frankfurt auto show.

Earlier this week Philippe Varin, boss of PSA Peugeot Citroën, told the Financial Times that France’s largest automaker was cutting production of some of its smaller cars in order to ensure that it met its target of having no more than 60 days’ inventory on hand at year-end. Peugeot might need to make job cuts later this year to match its lower production, Mr Varin said.

Carmakers still have bad memories of the deep drop in car sales that followed the collapse of Lehman Brothers in 2008, which saddled many of them with unsold vehicles on dealers’ lots, which they then had to discount. Three years later, the industry is responding more quickly to early signs of a slowdown.

Most carmakers are now also running leaner operations better equipped to withstand a sales shock. Mr Varin said that Peugeot had €11bn of cash, liquid assets, and credit facilities on hand.

Among other big carmakers, Didier Leroy, Toyota’s European boss said that the Japanese carmaker had for now no plans to cut production, in part because it has been operating at very low stock levels since last March’s earthquake.

“However, we will carefully monitor what will happen now, and specifically now in September-October” Mr Leroy told the Financial Times. “We really believe September-October will be a key indicator of what will be the trend for the coming months, and probably the year 2012”.

Toyota’s European chief executive said that Toyota in July had drawn up three scenarios for the car market this year, including its original forecast and a drop as big as the one that followed the banking crisis in 2008. The company had settled on a third scenario between the two, he said.