Vauxhall ‘unaffected’ by GM’s share slump

Jun 28 2008 by Alistair Houghton, Liverpool Daily Post

VAUXHALL Motors says it is business as usual for its Ellesmere Port site, despite parent company GM’s stock market battering.

Shares in GM this week fell to their lowest level since 1955, after analysts warned the company would have to raise funding to keep growing. The company’s New York-listed shares have fallen 38% over the past month.

It comes at a tough time for the US motor industry as the credit crunch and rising fuel costs are reducing customer demand.

Ford has had to sell off businesses such as Jaguar Land Rover to reduce its huge debts, while Chrysler was even forced to deny rumours it was heading for bankruptcy.

Goldman Sachs cut its rating for GM to “sell”.

Analyst Patrick Archambault said: “We think GM’s automotive cash flow burn this year and next is likely to lead it to look to raise capital, which we believe could lead to significant shareholder dilution and/or a cut to the company’s dividend.”

A spokeswoman for Vauxhall said the UK business was unaffected. The company employs more than 2,000 at its Astra plant, in Ellesmere Port.

GM chief executive Rick Wagoner said the company had liquidity for the rest of this year.

He said: “We’ve got a very good, solid funding base under any scenario we see, solid through the end of this year. We have a lot of options to fund beyond that.”

Last week, Deutsche Bank and JP Morgan both warned GM would be forced to borrow heavily.

Ford sold Jaguar Land Rover, which employs more than 2,000 people at Halewood, to Tata for more than £1bn in March.

LEADING motor industry analyst Professor Karel Williams will be discussing the future of GM on the LDP Business Week show on CityTalk 105.9 on Sunday morning from 11am.

alistairhoughton