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GM to end car production at Luton

General Motors has announced this afternoon that car production at Vauxhall's Luton plant, home of the Vectra, is to cease in 2002.

Luton will concentrate on vans and off-road vehicles while passenger car production will be concentrated at Ellesmere Port.

This means that production of the Vectra will move to one shift early in 2001, then cease altogether at the end of the life of the current model in the first quarter of 2002.

The decision is part of a global reorganisation of GM's operations carried out in an attempt to stem massive losses.

GM's president and CEO Rick Wagoner and Ron Zarrella, GM executive vice president, broke the news at a media briefing in Detroit at 4pm UK time today.

Ellesmere Port will continue to produce the Astra and a study is being made to see whether the next generation Vectra could also be built there. In the meantime GM's Opel plant in Russelsheim, Germany, will become the new 'home of the Vectra'.

Nick Reilly, Vauxhall chairman and managing director, said: "While Vauxhall continues its successful sales and market share growth of the past two years in the domestic market, these moves on the manufacturing side of our business are necessary to retain competitive manufacturing resource in the UK and allow us to optimize the utilisation of our assets.

"We will work closely with the unions to minimise the impact of these changes and look at ways of supporting our employees directly affected by this announcement."

In a statement GM said: "Downturn of the Western European vehicle market and GM's market share performance in many of the individual countries, combined with shifting consumer preferences to smaller vehicles and intensified downward pressure on vehicle prices, leading to a third-quarter loss of £130 million."

He also said GM would be shedding 10% of its European workforce over the next year.

Vectra registrations in November were 5,273.

Mr Wagoner said at the media briefing: "We found ourselves facing too much competition in Europe and Luton was the one that we felt most logical to close.

"On the Luton site we have a second plant where we are producing commercial vehicles so some of the people (working on car production) will be needed in that plant. So this seemed like a humane way of handling this."

He stressed that the strength of the pound was "not a primary factor".

Around 100,000 people in the UK are employed by Vauxhall or in its supply chain and earlier this year the company announced a £189 million investment in its UK plants at Luton and Ellesmere Port, between them producing 300,000 vehicles per year.

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