LEADING motor industry experts have warned that continuing financial instability in the eurozone could lead to more closures among GM Europe’s factories unless the company returns to profit soon.

Their comments come after GM Europe reported deeper third quarter losses last week.

While GM in America reported strong profits, the European arm of the car-maker made a loss of $375m. That compares to a loss of $125m in quarter two.

Also, it has emerged that GM Europe is concerned about the relative expense of making cars in Britain, including at its Ellesmere Port plant. The company warned that British plants are suffering from the high cost of importing components.

Professor Karel Williams of Manchester Business School says that, while GM Europe has a good product range, the company needs to see demand from consumers rise across several important markets.

Prof Williams said: “It depends what happens in the eurozone.

“A substantial fall in demand would lead to more closures.”

Fellow car industry academic, Professor Garel Rhys of Cardiff Business School, said: “It is a difficult market in Europe at the moment. It has only increased by 1% over a year.

“The main markets are Germany and Spain.

“GM Europe is suffering from continued weakness in the car market.

“Also there is a long term problem of overcapacity in the company.”

The fortunes of GM Europe contrast with those of US parent General Motors, which made a profit before interest and tax of $1.43bn, its third consecutive quarter of profitable trading. Total third quarter sales were $21.3bn.

A spokesman for Vauxhall blamed ongoing redundancy in Germany and elsewhere for GM Europe’s continuing losses.

“The past two years have seen many difficulties with restructuring costs.

“The plan is to break even next year and be in profit by 2012.”