GM Expects Flat European Sales in 2005

GENEVA – General Motors Corp.’s money-losing European operation will have to improve its financial performance in 2005 without the benefit of significantly higher industry sales.

GM Europe Chairman Fritz Henderson predicts deliveries of cars and trucks in Western Europe will be flat with last year’s 16.8 million-unit total.

“We don’t expect to see a lot of growth, but we don’t expect to see a lot of contraction either,” Henderson says here on the eve of the Geneva auto show.

GM Europe Chairman Fritz Henderson

“It’s pretty much going to be like it was last year – some markets are going to be up; some markets are going to be down. We certainly don’t see any abatement in the competitive environment. That environment is going to stay quite aggressive.”

GM expects its European operations to lose $500 million in 2005, excluding restructuring charges. GME has lost money every year since 2000, despite numerous efforts to cut costs, downsize its workforce and re-energize its product portfolio.

Negative pricing and several sluggish European economies have contributed to GME’s slower-than-anticipated rebound.

However, in 2004 GME’s sales increased 2.4% and its market share held steady at 10%. And sales are off to a good start in 2005, with January’s deliveries up 5.6% vs. like-2004. Industry deliveries rose 0.8% during the first month of 2005 vs. year-ago totals.

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