Thursday, 18 June 2009

Vauxhall/Opel could cut 40% of prices

GM's European division, Vauxhall & Opel may have to make huge discounts on their models in order to sell enough cars to save jobs in Germany and meet the terms of the €1.5 billion short-term loans promised by Berlin. Simon Empson, managing director at (a UK based online new car broker), said that Vauxhall and Opel may even have to slash prices by "40% or more" to meet their sales targets.

Several analysts agree that due to the nature of the deal, Canadian car parts maker Magna International, which is leading a group of investors negotiating for the acquisition of the Opel brand, may very well focus on raising production rather than on generating profits.

"Everybody is looking to generate cash and the quickest but not necessarily the most effective way is to discount," said Stefan Bratzel, director of the Center of Automotive Research at the University of Applied Sciences in Bergisch Gladbach, Germany. "Peugeot, Renault and Ford need to make sure they don't fall by the wayside."

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