The 2013 Opel Mokka subcompact crossover, similar to the coming Buick Encore crossover in the U.S.(Photo: www.weigl.biz )
After losing more than $17 billion in Europe since 1999, and forecasting
a loss of as much as $1.8 billion there this year, General Motors now
says it can break even by mid-decade.
Magic? No, just hard-nosed
business moves, GM's Europe President and "Mr. Fix-It" Steve Girsky said
in a discussion after the automaker announced its third-quarter
earnings today: Cut production, trim the workforce, launch new models
and make older models more appealing.
GM said it made a profit of $1.48 billion overall in the quarter, but lost $478 million in Europe.
Ford Motor yesterday reported similar results: $1.6 net income despite losing $468 million in Europe.
recently announced plans to close one factory in Belgium and two in the
U.K. to cut production enough to match depressed demand in Europe,
increasing pressure on GM to be more aggressive there.
Perhaps understating the matter, Girsky said, "Achieving break-even results will be a significant milestone."
noted that it has the help of fresh executives atop its European
operations, some from outside the company, thus bringing fresh
Girsky noted that his envisioned "path to
profitability" includes "earning higher revenue from today's vehicles"
and not relying solely on home runs from the new models coming soon as
part of the rebound plan.
GM says it's already boosted
per-vehicle revenue in Europe by nearly $650 through repackaging options
to attract buyers to higher-price models.
Among the steps Girsky and GM outlined:
Renew and beef up Opel and Vauxhall product lines. Girsky: "We have an
aggressive, multi-billion dollar product plan that will deliver 23 new
models and 13 new engines though 2016." He noted that many of the
launches in the near future are "in entirely new segments," including
the Mokka small SUV (similar to the Buick Encore on sale in the U.S.
later this year), Adam minicar and Cascada convertible.
-- Cut another 300 jobs, for a total this year in Europe of 2,600.
Shift production of the Safira minivan to two plants, Ellesmere Port in
the U.K. and Gliwice, in Poland, in 2015, instead of scattering it
among three plants, as now. The shift will let the two factories operate
profitably, running three shifts.
-- Close the Bochum plant in
Germany; no product is assigned there after 2016. That'd be the first
time a major German car plant has been closed since World War II.
-- Cut production at Eisenach in Germany by dropping to two shifts instead of three early next year.
Cut vehicle inventories another 20,000 units by the end of the year, on
top of the 100,000 already sliced since February. Previously, GM had
been building vehicles and hoping they would sell. Inventory and
production cuts are aimed at the obvious goal -- making production match
-- Make credit more available to car shoppers, so it's
easier for them to buy vehicles. Most European car sellers have captive
finance arms. GM doesn't. It's negotiating with Ally to provide auto
loans more broadly in Europe. Ally is the former GMAC, GM's captive
finance arm, but it's now not part of the automaker.