GM to cease production in Europe

General Motors Corp.'s European unit plans to reduce production by about 40,000 vehicles by the end of the year as credit-market turmoil causes a drop in car sales. The Adam Opel brand's factory in Eisenach, Germany will start a three-week production halt next week, while the plant in Bochum, Germany, is completing a two-week closure, Andreas Kroemer, a spokesman for the Ruesselsheim, Germany-based division, said today in a telephone interview.

“The financial crisis is impacting demand,'' Kroemer said. “We don't want to stockpile.''

The cuts are equivalent to 2.3 percent of the 1.74 million vehicles that Detroit-based GM built in Europe last year. Auto- industry sales in the region dropped 16 percent in August, the biggest monthly decline since 1999, with GM brands reporting an 18 percent drop. Competitors such as Ford Motor Co., Bayerische Motoren Werke AG and Daimler AG have been reducing production in recent weeks in response.

General Motors' temporary shutdowns also affect plants in Ellesmere Port and Luton, in England, as well as Zaragoza, Spain, reducing production of the Astra, Corsa and Zafira models, Kroemer said. The U.K. plants make cars under the Vauxhall brand. Opel's Ruesselsheim factory had already scaled back production to prepare assembly lines to build the new Insignia, he said. Bloomberg