Global manufacturer GM, responsible for Vauxhall in the UK and Opel on the continent, has outlined plans to have GM Europe (GME) balance its books by the middle of this decade with a range of cost cuts and new products.
Steve Girsky, acting president of GME, said the aim of "sustainable profitability in Europe" was part of the company’s longer-term ‘Drive Opel 2022’ plan.
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Girsky said the breaking even of GME would require higher revenue from existing and new vehicles plus the reduction of the company’s break-even level "from where it is today". By current company estimate, GME will end 2012 between $1.5bn and $1.8bn (£935m and £1.12bn) in the red, adjusted for earnings before tax.
Cost savings include reducing vehicle inventory by 100,000 units since February, with a further 20,000 units gone by the year’s end; cutting 300 more jobs on top of the 2,300 shed already this year; plus the reducing of fixed costs by $300m this year, reduced by a further $500m from 2013 to 2015.
23 models, 13 engines, one alliance and two other carmakers’ plans
Even while cutting expenditure, GME plans to introduce 23 models and 13 new engines, including targeting new segments and markets with the Mokka, Vauxhall’s small SUV equivalent of the Nissan Juke or koda Yeti; the Adam supermini, a segment attracting a lot of fourth-quarter UK finance deals and which Fiat is hoping to squeeze with investment in the 500 and Panda; and the Opel Cascada, the mid-size convertible which GM chief executive Dan Akerson has said he would like to see in the US, possibly under the Buick brand.
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By GlobalDataParent GM is also hoping the alliance signed earlier this year with PSA will aid both companies to save money on four combined vehicle programmes.
The news is similar to Fiat’s announcement on Thursday of 17 new models, and Ford’s on Wednesday of 15 new models, to combat the decline of European sales for all manufacturers.
richard.brown@vrlfinancialnews.com
