VAUXHALL CEO Nick Reilly is predicting a slump in car sales this year, but remains confident General Motors will be turning a profit by 2012.
Mr Reilly says the Government’s scrappage scheme, although beneficial, ‘artificially upped the market’ last year so isn’t expecting to maintain the same level of sales.
However the 59-year-old, who was a former director at Vauxhall’s Ellesmere Port plant, is confident the carmaker’s business plan will result in a strong future. In the second part of his interview during a recent visit to the North Road site, Mr Reilly also talks about the restructuring of its European operations and the costs involved in turning the company round.
On the future:
“I think 2010 is going to be a little worse than 2009 but we do expect to start to see recovery in the back half of the year, and in 2011, 2012, we will have further improvements.
“We are not planning for the market in Western Europe to get back to the levels it was in 2007 - at least over the next five to six years - so our plan is, we think, relatively conservative.
“We think we’ll probably break even next year and make some reasonably decent money in 2012.
“If you’re profitable it generally turns into more security for jobs but I stress in this world you can’t give guarantees for anything. No one owes us a job, we have to earn it every day.”
On restructuring in Europe:
“We did have to take a capacity out of Europe because we need to get our overall cost down so we can make money at a lower level.
“So we have given the intention to close the Antwerp plant. It makes similar products to Ellesmere Port and Poland, so if we take the Antwerp plant out it gives opportunities to the two other Astra plants to pick up that volume.
“We’re going to utilise this plant and Poland significantly more. The improvements here and the relative costs in Poland meant it was the right economic decision to close Antwerp.
“You can’t take 10% of capacity out of every plant, you just don’t get the benefits.”
On the costs for recovery:
“We reckon in total for this year to pay for the continuation of investments and in new technologies, plus the cost of restructuring, we calculated we would need 3.3 billion euros.
“When the UK government looked at the plan they said ‘OK we like your plan but if we have a double dipped recession and the market goes off track again you may need more, and so rather than you coming back we want you to add 400 million to the requirement that you think you need’.
“So that took it from 3.3 to 3.7. GM has since announced recently that it is willing to up its contribution to that 3.7 by 1.9 billion.
“That more or less leaves about 1.8, 1.9 billion from banks which will then be guaranteed from governments so we’ve still got a way to go.”
