Political football

14 October 2004 By Marianne Brun-Rovet

General Motors is the latest to announce it is cutting its costs in the face of rampant Asian carmakers. That’s all very well. But capacity needs to be cut too. And that’s really hard while governments continue to treat the industry as a political football.

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General Motors said it would cut up to 12,000 jobs in Europe, or nearly 20% of its workforce there, as part of efforts to restructure its lossmaking European operations.

The world's largest carmaker by sales is trying to cut its European costs by E500m by the end of 2006. Its European business, which has built up losses of more than $2bn over the past four year, includes Adam Opel in Germany and Sweden's Saab. Most of the job cuts will be made next year.

The announcement came as figures showed European carmakers had lost market share to Japanese and Korean rivals in Europe since the beginning of 2004. According to a European Automobile Manufacturers Association report, the five largest European automakers – VW, Peugeot, Renault, DaimlerChrysler and Fiat together lost 1.2% of market share in the first nine months of the year. During the same period, the five largest Asian brands – including Toyota, Daewoo and Honda – gained a point.

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