General Motors Europe's financial health deteriorated sharply during 2008 as the company suffered an adjusted pretax loss of $1.6 billion, compared with a $55 million profit in 2007.
Fourth-quarter revenues fell to $6.4 billion from $10.7 billion in the same period in 2007 and the adjusted loss widened to $956 million from a $215 million loss the year before.
GM's European operations were hit badly by the collapsing car market. The company said lower unit sales, a poorer mix of models sold and unfavorable foreign exchange rates contributed to the poor results.
The $1.6 billion adjusted pretax loss for 2008 increased to a $2.8 billion reported pretax loss when asset and goodwill special charges related to Saab and separation programs were added. This compared with a reported loss of $524 billion during 2007.
GM Europe's full-year revenues slipped to $34.4 billion, down from $37.5 billion in 2007.
In the fourth quarter, GM Europe cut production by 53 percent to 214,000 units to align output in line with the softening markets.
"That's pretty sizable and is due to the volumes we are seeing in western Europe and now in eastern Europe," said Ray Young, GM's chief financial officer.
In 2008, GM's new-car sales in European markets including Russia and Turkey fell 6.5 percent to 2.18 million. As a result revenue fell by 8 percent and deliveries of cars to dealers fell by 11 percent.
The weakening of the British pound, Russian ruble and Turkish lira also hit the company's results.
Young said GM Europe had done a good job in reducing costs by $400 million during the year.
He said 2009 will be more challenging in the near term than 2008. "That's why we are accelerating the pace of cost restructuring in North America and around the world. We are not forecasting a heroic recovery of the industry in 2009"
Karin Kirchner, General Motors Europe spokeswoman, said consumers stopped buying big ticket items because of the economic crisis. People who did buy cars chose cheaper models with fewer accessories, she said.
GM Europe's figures do not include revenues from European sales of Chevrolet cars. GM Daewoo in Korea exports Chevrolets to Europe. GM Daewoo reports its financial figures in General Motors Asia Pacific Region.