Agreement between GM and Renault to manufacture commercial vehicles at plant expires in 2013

General Motors has imposed a spring deadline as it once more reviews the future of its Luton plant, Vauxhall’s manufacturing base for more than 100 years. Speaking at the Detroit motor show, Nick Reilly, chief executive of GM’s Vauxhall and Opel brands, said the company hoped to reach a decision about how it will treat Luton “within a month or two”.

GM has bounced back from bankruptcy and is enjoying strong sales in the US, but its European sales are flat. Reilly said no options had been ruled out. An agreement between GM and Renault to manufacture commercial vehicles at the plant expires in 2013. “We are continuing to develop product with Renault and are looking at what is the best future for that plant,” Reilly said.

He added that those plans should be finalised soon, that all options were being looked at and that it was possible different products could be manufactured at the plant, which employs more than 1,000 people.

Last year the company said it was “committed” to Luton despite continuing doubts over the plant’s future. Sales figures for IBC Vehicles, the joint venture between GM Europe and Renault, collapsed in 2009, and sales are expected to remain subdued this year. The partners have agreed to work on a new generation of commercial vehicles but have not announced where they will be built. GM’s UK plants are considered among the most efficient in Europe.

Reilly said that overall sales in Europe were likely to remain flat this year but that GM could gain market share.

He said he was excited about the future prospects for electric vehicles across the continent. GM won best car at the Detroit show for its Volt hybrid electric vehicle. Reilly said in the short term demand would outstrip supply. He expects to sell all the 10,000 Volts GM will ship to Europe in 2012 and is predicting that electric cars could account for 15% to 20% of all sales by 2020 as long as governments continue to offer subsidies to buyers.

So far the UK government has spent £43 million subsidising cars in Britain. Reilly said the cost was minimal to taxpayers and that he hoped that the subsidies would be unnecessary within five years as technological developments and economies of scale bring down prices.

“A lot depends on the price of oil and the cost of components coming down,” he said. “But if after five years we can’t produce something at a competitive price, I believe they will [produce cost-effective cars] from Asia.”

Reilly said the van market was “perfect” for electrification. “The trouble is it’s a very, very price-sensitive market,” he said. And until costs come down fleet buyers are likely to steer clear.

GM’s European operations are also looking to expand its Opel brand in country’s including Israel, Chile, China and Australia. Reilly said it is possible some of those vehicles could be made in the United States.

Business: Manufacturing sector | guardian.co.uk