GM making progress in restructuring its money-losing Opel/Vauxhall unit in Europe

Article by Christian Andrei, on May 6, 2013

General Motors said last Thursday that its first-quarter pretax loss in Europe decreased to $175 million from $294 million the previous year. This prompted analysts to state that while GM is making advancements in its plan to restructure its struggling Opel/Vauxhall unit in Europe, it still has much to do. GM is outperforming Ford Motor Co., which reported that its pretax operating loss in Europe for the quarter steeply grew to $462 million from $149 million the prior year.

GM was able to reduce costs in Europe by $300 million. As a result, the prices of its models were not changed. The figures in Europe imply that GM's cost cuts are beginning to offset the decreasing sales throughout the industry, which are nearing its lowest levels for the past 20 years. Chief Financial Officer Dan Ammann told reporters that the results in the first quarter are the result of the implementation of its plan for Europe.

Ammann said that GM is staying with its target of breaking even in Europe by the middle of the decade. However, he said that there are no signs that the region is facing a quick turnaround. He said that at this point, it’s too early to declare that Europe has hit bottom. He said that there are some things that the company is unable to control.

One example he cited is the European macroeconomic environment. Ammann said that in the last quarter, GM cut its costs by about $200 million by making reductions in engineering and fixed costs as well as from timing items that "amplified cost savings.” He believes that the situation will normalize later in the year. He explained that in Europe, the company is in “aggressive cost-control mode.” He anticipates that towards the end of the year, GM’s cost savings in Europe will slow down.

Topics: gm, opel, vauxhall, europe

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