Speaking at the Geneva Motor Show, Aldred said business plans drawn up shortly before the credit crunch were based on the expectation of selling 20m cars a year in Europe alone by 2014
European car manufacturers are suffering from an unsustainable production glut, the boss of Vauxhall Motors has warned at the start of the 2012 Geneva Motor Show.
Duncan Aldred spoke as executives at Vauxhall's parent, General Motors, mulled the closure of the Ellesmere Port factory with the loss of up to 2,800 jobs. Speaking in Geneva, Aldred said business plans drawn up shortly before the credit crunch were based on the expectation of selling 20m cars a year in Europe alone by 2014. This year, analysts expect 12m cars to be sold in western Europe.
"There is too much capacity. The industry cannot sustain forever the level of capacity it has got." He added: "It does not create a good business model." GM's European operations, where the US group makes the Opel and Vauxhall brands, lost $747m (£471m) last year – a performance described as "simply unacceptable" by GM.
Warning of another difficult year for European mass-volume car makers, Aldred added that sales had collapsed in some parts of southern Europe. Aldred declined to comment on the future of Ellesmere Port, which is believed to be on the critical list alongside GM's Opel plant in Bochum, Germany.
However, Aldred paid tribute to GM's UK operations, pointing to the amount of executive talent they have produced over the years. "The [GM] operation is filled with a lot of UK guys … We are a great exporter of both ideas and talent." Aldred, appointed chairman of Vauxhall in January, added that the pound's competitiveness against the euro gave the UK an ongoing advantage in manufacturing. While UK car sales have fallen to their lowest since 1994 with 1.94m new registrations last year, manufacturing is enjoying a boom with a 5.8% increase in the number of cars made in Britain last year.
"A lot of the reasons why we are seeing a lot of investment in the UK, or at least sustaining what is already in there, is because it gives a big natural hedge against the currency," Aldred said.
The business secretary, Vince Cable, faces further questions about Ellesmere Port's future this morning when he attends the Nissan press conference in Geneva. Nissan will announce the creation of 400 new jobs at its Sunderland plant, the largest in the UK, as well as up to 1,600 more in the supply chain when it confirms that a new compact car is to be built in the north-east.
Separately, the French car maker Peugeot Citroën has announced it will hold a €1bn (£832m) rights issue to fund its alliance with GM.
"This will allow us to accelerate our international expansion and our move into higher-end models faster than we would have been able to do on our own," said Jean-Baptiste de Chatillon, the chief financial officer of PSA Peugeot.