General Motors bankruptcy will have major implications for UK production

As vehicle manufacturer General Motors (GM) files for Chapter 11 bankruptcy, Sid Hopper, automotive partner at BDO, comments:

“This is a hugely significant event and the impact will be felt across a number of business sectors.  What happens in the next few weeks will be crucial to future prospects for jobs and businesses in the UK.

“However, we may well see serious repercussions for Vauxhall factories and component suppliers in the UK.  Production volumes have already fallen with the resulting threat of temporary factory shutdowns and even permanent closures.   By 2010 the industry is forecast to produce up to 25 per cent fewer cars in Europe than they did in 2008.

“The bigger issue at stake here is that GM’s position is not unique.  All car manufacturers are going to have to make difficult decisions in the next few months.  They will need to address the over-capacity in the industry and the changes in vehicle purchasing habits.

“As production stalls and car manufacturers downsize, we could see a number of failures in the supply chain impacting organisations in the UK, Europe and the US.  For example, the GM filing is expected to trigger a number of filings by large tier 1 suppliers in the US. Car manufacturers will be looking very carefully at their supply chain and, as Chrysler recently admitted, picking their “winners and losers”.

“The economy as we know it is changing and this move by GM is just another domino falling as we move towards a new way of doing business.  It will no doubt be a very painful transition but ultimately the car industry will emerge stronger and leaner.”

-Ends-

For more information, please contact Dee Crooks at BDO on 020 7893 2761 / 07815 172 051 (email dee.crooks@bdo.co.uk) or Vicky Taylor at Blue Rubicon on 020 7260 2700 (email Vicky.taylor@bluerubicon.com) 

For further information on General Motors over the next 24 hours, please keep an eye on http://bdo.scripthandler.com/brmicro/

Notes to editors:

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