Intense pricing pressure, coupled with restructuring costs and currency volatility continues to hit car manufacturers with Vauxhall and Toyota yesterday confirming they are both currently trading at a deficit.
Vauxhall, the British arm of General Motors, is expected to unveil losses of just less than £200m for last year when it publishes its figures next month.
"We did make a profit in the first half of last year, and we have since made a loss. We continue to trade at a loss for the moment," said a spokesman for Vauxhall. He declined to comment on last year's figures but well-placed sources said that losses were around the £190m level.
The company, which made pre-tax profits of £128m in 1999, is understood to have made a small operating profit in 2000 but this was wiped out by the huge costs of closing down car production at its key Luton site which takes place in the first quarter of next year.
This affects up to 2,000 jobs at Vauxhall and results from the US car maker trying to stem losses by cutting its European output.
In Britain Vauxhall has also been hit by increased pressure on new car prices estimated in a recent independent survey to be down 10% year on year.
The company has also suffered from a decline in output caused by falling demand for its Vectra model which is to be replaced, but not till 2002.
The Vauxhall spokesman said there had been extra spending of money on restructuring as a result of the move in February to a one shift system.
Meanwhile Toyota has confirmed it is still losing money in Britain. It could be £50m in the red this year meaning the Japanese manufacturer would have run up a deficit of nearly £200m in the last four years.
The company says it is implementing a cost-cutting programme in a bid to reduce overheads by 30%. Part of this is to be achieved by sourcing more components inside the euro-currency zone and by increasing capacity utilisation by switching assembly of the Corolla models from Japan to Britain this year.
It is not just Toyota and Vauxhall that are fighting for profitability. Honda does not expect to break even in Europe till 2003 while Nissan is only just in the black.
Meanwhile Ford has ended car production at its Dagenham plant.
