General Motors will cut up to 12,000 jobs over the next two years to reduce annual costs at its European operations by 500 million euros (£341 million) by 2006, it said today.

Most of the job cuts will come in Germany and 90% in 2005, the world's biggest carmaker said in a statement.

GM made no mention of plans for specific plants.

"With losses since 1999 and no reasonable indication that market or economic conditions will improve substantially in the coming years, we have no other choice than to take tough steps to ensure our long-term success," says General Motors Europe chairman Fritz Henderson.

This should not be seen as a lack of commitment to grow the company or provide new products, he added, "but the lack of industry growth, the pricing environment and the competitiveness of the market do not allow us to grow fast enough to offset the cost base we have today."