General Motors to Close Opel Plant in Bochum, Germany, in 2016

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Researched by Industrial Info Resources (Sugar Land, Texas)--Opel, the European arm of U.S. auto giant General Motors (NYSE:GM) (Detroit,Michigan), said that it would halt auto production at its Bochum plant in 2016 after production of its Zafira Tourer model ends. The company said that the plant will continue to operate as a parts distribution centre. The company employs 3,300 people at the Bochum plant, which is one of Opel's four manufacturing plants in Germany.

The company said that the decision was a response to a dramatic slump in car sales in Europe. Demand for new cars in the European Union fell almost 10% in October compared with a year earlier, with all the major markets contracting. According to figures from the European Automobile Manufacturers Association, the new car sales in Europe fell 7.3% in the first January-October period.

"Despite rigorous efforts, there was no success in changing the situation," Opel said in a statement. "The main reasons are the dramatic declines in the European car market and the enormous overcapacity in the entire European auto industry."

According to company forecasts, General Motors estimates to lose more than $1.5 billion on its European operations, while it aims to return profitability in Opel by 2015. European factories are unable to compete on price in global markets, which in turn makes it almost impossible to utilize the capacity to build cars for exports.

Last Friday, Italian car manufacturer Fiat Auto SpA (MI:FIAT) (Turin,Italy) announced its plans to cut its workforce by 1,500 in a car plant in Tychy, Poland, due to weak market conditions. Currently, the Tychy plant is making Fiat 500 and Fiat Panda models. "Current market conditions and the negative outlook represent a major challenge for Fiat Auto Poland," the company said. "The market segment for cars produced at Tychy--the A segment--has been the worst affected."

In late October, U.S. carmaker Ford Motor Company (NYSE:F) (Dearborn, Michigan) announced its plans to consolidate its businesses in Europe. The company is shutting a transit van manufacturing plant in Southampton, England, and a stamping plant in Dagenham, by mid-2013 and a car and minivan plant in Genk, Belgium, in late 2014. For additional information, see October 29, 2012, article - Ford Consolidates Businesses in Europe, Closes Three Plants.

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