Opel is considering shifting some production of its Astra compact car to Poland from one of its plants in Germany, Frankfurter Allgemeine Zeitung reports, citing source privy to the works council and labor unions. According to the report, Opel is planning to shift an annual production of 10,000 Astra cars from its Ruesselsheim factory in Germany to Gliwice site in southern Poland.
Opel currently builds 30,000 Astra cars annually, as well as the Insignia mid-sized model, Ruesselsheim. With the transfer, Opel would effectively reduce the capacity of the Ruesselsheim plant to 20,000 cars annually. Opel is under heavy pressure from parent General Motors Co. to reduce costs and excess capacity to cope with falling sales and massive losses in Europe.
GM’s European units, which consist of the Opel and Vauxhall brands, posted $747 million in losses before interest and tax in 2011. In the first quarter, Opel/Vauxhall car sales dipped 15.8 percent to 227,590 in the countries that are members of the European Union and the European Free Trade Association, according to industry body ACEA.
Meanwhile, total industry sales dipped 6.6 percent.Opel has cut production at Ruesselsheim to four days a week due to the drop in demand. The site is currently one of GM European plants that produce the Astra along with Gliwice, Bochum in Germany and Ellesmere Port in England.
Reports have recently surfaced that Opel may also reduce costs by expanding production capacity in low-cost countries while closing its Bochum and Ellesmere Port plants.
According to an internal letter obtained by the Frankfurter Allgemeine Zeitung, Opel chief executive Karl-Friedrich Stracke told employees that the brand's falling market share in Europe is due to the shift of the market’s attention to premium and budget brands as well as the pricing pressure as other carmakers cut prices to improve capacity use at their plants. He admitted that Opel is not ready to participate in a price war. [source: Autonews]