GM to expand Opel diesel-engine plant in Poland

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FRANKFURT (Bloomberg) -- General Motors Co. will spend 250 million euros ($342 million) expanding its Opel diesel-engine plant in Tychy, Poland, as the U.S. carmaker seeks to return to profit in Europe.

The factory will be upgraded in preparation for building a new 1.6-liter four-cylinder diesel engine starting in 2017 for vehicles made by GM's Opel and Vauxhall divisions in Europe, the company said in a statement today.

GM is working toward ending losses by mid-decade in Europe that have totaled more than $18 billion since 1999.

Opel is investing 4 billion euros in the four years through 2016 to develop 23 vehicles and 13 engines as European emission rules are becoming more stringent. "The new mid-sized diesel engine family is an important part of our engine offensive," Peter Thom, head of manufacturing at Opel, said in the statement. "We appreciate the good quality and high efficiency of our Polish location and look forward to implementing this exciting project."

The plant expansion is "supported" by the Polish Ministry of Economy, GM said, without giving details. The factory will have annual capacity to produce 200,000 engines. The plant currently employs about 530 people, according to Opel's Web site.

To give Opel more scope to expand, GM decided in December to pull the Chevrolet brand out of Europe, reversing a decade-old sales effort to promote the U.S. nameplate in the region.

Opel plans to close a plant in Bochum, Germany, by the end of this year to lower production costs. Workers at GM's other European facilities have agreed to wage concessions in exchange for securing their jobs.

The combined market share of Opel and Vauxhall in Europe remained stable at 6.7 percent last year, according to the ACEA industry group. New car registrations of the two brands declined 2 percent to 825,000 vehicles while the overall market contracted 2 percent.

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