In an effort to to stem losses with its European business in the midst of an extended auto market contraction, U.S. automaker General Motors Co. (GM) said that it will stop producing Opel cars in its Bochum, Germany plant by 2016.
The decision to close the German plant could mean that the Opel's Ellesmere Port plant in the UK will remain operational.
The Detroit-based company seeks to restore profitability in Europe, although this could mean the first time a car factory will close down in Germany since the Second World War. GM estimates a loss of up to $1.8bn this year as sales in the industry is expected to fall a fifth straight year.
The Bochum facility is one of the four Opel manufacturing plants in Germany. Talks between management and the unions had started since June.
The company said that the warehouse in Bochum will remain operational and there are plans that the plant could be used to manufacture components after 2016.
With deliveries this year estimated to reach its lowest since 1995, the European Automobile Manufacturers Association said that the car market could see its biggest decline in almost two decades in 2012. Auto executives have been looking to cut capacity throughout the region as they do not expect sales to recover until 2014.
The decline in the market has also forced companies including PSA Peugeot Citroen and Ford Motor Co. to announce closures of their factories in the UK, France and Belgium.
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