GM is on target with Opel turnaround plan, CEO Akerson says
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MUNICH -- General Motors CEO Dan Akerson said an agreement between management and German labor unions on restructuring the automaker's Opel unit is expected in the autumn.
Akerson said GM has made progress with unions on all the key components of a plan to improve productivity, reduce costs and cut excess capacity at the Germany-based division.
He was speaking to reporters on Thursday after GM reported a second-quarter loss of $361 million in Europe.
GM Vice President and Opel Supervisory Board Chairman Stephen Girsky said the automaker is working hard to improve the profitability at Opel. "Part of that are reductions in production costs, raising vehicle sales and achieving higher profit margins," Girsky said in a statement on Thursday.
"We are also working hard to reduce unnecessary structures and bureaucracy," he said.
Analysts said they were impressed that GM was able to maintain pricing power in Europe in the face of brutal market conditions and aggressive deals offered by rivals such as Volkswagen.
Chief Finance Officer Dan Ammann said GM has been able to maintain flat pricing in Europe because of the introduction of some new models. He added that recent cost-cutting moves, such as idling some assembly lines, have helped the bottom line.
Morgan Stanley estimates GM losses in Europe this year will $1.4 billion. UBS Securities raised its estimated full-year losses for GM Europe to $1.6 billion from $1.3 billion earlier this year.
High inventory
Morgan Stanley analyst Adam Jonas said GM's European losses in the second quarter were "better than we expected, but we suspect due in large part to inventory build that must come out."
Ammann told reporters that GM would address high Opel vehicle inventories in the third and fourth quarters.
GM's second-quarter European loss was less than rival Ford's $404 million loss in the region but much worse than GM's profit a year ago of $102 million. Analysts polled by StreetAccount had expected a second-quarter loss of $426 million for GM Europe.
Last month, Ford said it expects its Europe operations to post a full-year loss of more than $1 billion, nearly double the automaker's earlier forecast of a loss between $500 million and $600 million, due to worsening economic conditions.
GM said its second-quarter European vehicle production fell 29 percent from the year-earlier period to 230,000 vehicles. GM's market share dropped to 8.8 percent from 9 percent, the company said.
Earlier this year, Opel's supervisory board approved a mid-term business plan, which runs through 2016. But real savings from the restructuring will not come until GM negotiates a deal with labor unions to close the Bochum, Germany, plant after 2016.
Reuters and Bloomberg contributed to this report
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