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Astra launch accompanied by GM Europe's determination to reach profit

Over the past three years, GM Europe has lost $1.6 billion, and executives are no longer confident of reaching break-even this year, given the dollar-euro exchange rate and doubts about prospects for economic growth in European markets.

While Rick Wagoner said when launching the new Astra at Ellesmere Port that the combination of Astra and Vectra output at the plant would help its profitability, Opel CEO Car-Peter Forster, whose European plants also build the Astra, noted in one report that wage costs in Germany were unsustainable without 3%-5% annual growth in productivity. He noted that GM's Polish plant, where the current Astra is to be assembled after the launch of the new one, had labour costs just 20% of those paid in Germany.

Carl-Peter Forster expects sales of the new Astra to reach half a million units a year in 2005, once estate and two-door hatchback versions are in production, a dramatic improvement on last year's 300,000-unit Astra volume. The lower medium segment is declining in popularity overall, as demand fragments towards 'niche' alternatives – such as the Astra-based Zafira, but noting VW's spec enhancement to the new Golf to overcome initially slow demand, Opel is pricing the new Astra considerably lower than the Golf and is offering advance order discounts.

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