The Irish distribution business for Opel cars broke through the €200 million sales threshold for the first time last year. But a modest recovery in market share after nearly a decade of decline came at the expense of its already-low profit margins, writes Arthur Beesley, Senior Business Correspondent

Turnover at General Motors Ireland Ltd rose by €26.4 million to €203.67 million in 2005 but the company's operating profits of €987,000 were ahead by only €50,000. This means that operating profit margins dropped to 0.48 per cent from 0.53 per cent.

At the same time, the overall car market in Ireland grew by some 9 per cent. GM Ireland's 2005 pretax profit of €996,000 compared with €862,000 in 2004.

The company, wholly-owned by General Motors Corp in Detroit, imports only Opel cars into the Republic. It has no responsibility for other GM marques such as Saab and Chevrolet.

The accounts - filed recently with the companies office - make it clear that the oil price rise and the upward creep in interest rates constitute "risks and uncertainties" for the business.

The directors say in their report with the accounts that the price of petrol at the pump "could again be a major factor" for consumers when deciding to buy a new car. They also say the higher cost of borrowing "may help to restrain the total size of the vehicle market".

However, they say that such risks may be mitigated by the influx of money from Special Savings Incentive Accounts.

The directors say the current trading year marks Opel's return to the SUV segment with the introduction of "small SUV" Antara vehicle. The company is also replacing the Corsa vehicle, which was introduced in 2001 and which accounts for some 20 per cent of total Opel volume.

Opel was once the most popular car in the Irish market but the years of the economic boom were not kind to the marque, which lost market share in each of the nine years to 2004, when it put a floor under the collapse.

GM's tough time in Ireland mirrors serious challenges it has faced in its North American home market, where it has had to cut a third of its workforce after prolonged trading difficulties.

GM Ireland's directors say in their report that their "long-term objective" is to be consistently in the top three vehicle brands in Ireland and profitably challenge for market leadership. "The short-term objective - to be fifth in the market in terms of market share - was achieved at the end of 2005," they say.

"It is important to note that the overall market for vehicles increased in size in both the years 2004 and 2005 following decreases in market size since 2001."

Official industry figures for the year to July show that Toyota remains the biggest selling marque in the Irish market with 14.07 per cent, followed by Ford (11.23 per cent), Volkswagen (11.18 per cent), Nissan (8 per cent) and Opel (7.7 per cent). Renault is in sixth place with a market share of 5.38 per cent.