GM CEO Mary Barra traveled to Germany and confirmed the maker's commitment to Adam Opel.
General Motors’ new chief Mary Barra is spending the early part of her tenure reassuring the company’s European subsidiary, Adam Opel AG, that the U.S. maker is committed to Opel’s success.
Barra traveled to Opel’s headquarters in Ruesselsheim, Germany, to confirm that the company is committed to bringing the company back to profitability by the middle of this decade. Opel has been operating in the red since 1999, leading a number of key analysts to suggest that GM consider divesting itself of the subsidiary.
“I thought it was very important to reinforce in person my commitment and GM’s commitment to Opel,” she said, according to the Associated Press. She called Opel “clearly a vital part of our company.”
In fact, while there, she announced Ruesselsheim is adding a third vehicle to its production schedule – the plant already builds the Insignia and Astra. She declined to name the vehicle, citing competitive concerns. The company is closing another plant in Bochum at the end of this year.
To ensure GM Europe meets the profitability goal, the maker is investing $5.5 billion in its operations there. As part of that, Opel will turn out 23 new models and 13 new engines during the next several years.
Along with most automakers, GM has been fighting a tough battle in Europe. Sales are sluggish due to an economy that’s been down for the better part of a decade. Unemployment is hovering around 12.1% and things are only now beginning to turn around.
Opel’s been able to find some success, according to Barra, who noted the Adam city car and the Mokka small SUV as examples. Opel’s market share was up slightly on a year-over-year basis to 6.8% from 6.7% in 2012.
Despite the uptick, Barra said last week she expects GM Europe to post losses in 2013 and 2014 and that there is no hard deadline to get the unit turned around. The European maker has reported billions in deficits and GM is expected to reveal another large loss next week when it releases its final earnings report for 2013.
Opel has been the proverbial hot potato for GM’s top executives dating back to Rick Wagoner, the chairman ousted as part of a deal with Washington to get a bailout package for the bankrupt Detroit maker in 2009. Wagoner’s successor, Fritz Henderson, came close to selling off a majority stake in the European subsidiary to a Russo-Canadian consortium led by Ontario-based Magna International, only to reverse course under pressure from the GM Board of Directors.
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Among those who wanted to keep Opel was then-board member Dan Akerson, who became GM Chairman and CEO in 2010. Akerson repeatedly defied calls by several influential automotive analysts to dump Opel, and the visit to Germany by Barra, his hand-picked successor, is a symbolic gesture aimed at reinforcing the point: Opel is part of GM’s long-term plans.
(Click Here for more on GM’s plans to resurrect Opel and Europe.)
“We’re no longer talking about the viability of Opel,” Barra said last week. Instead, GM is working on revamping the portfolio with products European consumers really want “and rebuilding the image of the Opel brand,” said the new CEO, who has served on the Opel Board for the past couple of years. “We’re going to do everything we can to strengthen the Opel brand.”