DETROIT/FRANKFURT -- General Motors Co. said more cost cuts are coming for its money-losing Europe unit after the last turnaround plan failed to end losses there.
"We have to match capacity with demand, and demand has been falling," CEO Dan Akerson said of Europe. "We are looking at everything in order to achieve a better break-even point, a lower break-even point, and scale. There's more to come on this, I think, in the next couple of months."
GM's Europe business, including Opel/Vauxhall, lost $747 million last year before taxes and interest. While that's an improvement from $1.95 billion lost in 2010, it's not the break-even GM had planned until November when it pulled back the forecast as the European outlook worsened.
Less than three years after the bankruptcy, GM is again the world's largest automaker. Powered by growing sales in the United States, where it cut labor costs and closed factories, GM has become more profitable than at any time in its 103-year history. Now Akerson wants a similar turnaround in Europe.
"There's a general recognition by all constituencies that the situation in Europe today is not a whole lot different than it was in the United States or North America, generally, three-plus years ago," Akerson said on Thursday during a conference call with industry analysts.
Opel has continued to lose market share under pressure from competitors such as Volkswagen and Hyundai. A drawn-out rescue effort in the wake of GM's bankruptcy, including an aborted sale, also soured consumers on the brand.
Opel's new-car sales fell nearly 21 percent to 57,479 in the EU and EFTA countries January, according to industry association ACEA, giving the brand a 5.7 percent market share, compared with 6.8 percent in January 2010.
100% capacity use aim
Opel CEO Karl-Friedrich Stracke said difficult negotiations with labor leaders on how to turn around the business likely will last for months. "I expect this not to happen in a month or so, rather than in a couple of months, that's at least how I see the timetable," Stracke said on Thursday.
He said he aimed to raise the utilization of Opel's vehicle production capacity to a 100 percent on a three shift basis.
He declined to comment on whether he intended to achieve this either by taking capacity out -- for example by shutting the Zafira plant in Bochum, Germany, -- or shifting overseas production of cars sold in Europe under the Chevrolets or Opel to some of his underutilized factories.
"It's too premature to say anything else on plant closures or utilizing [plants to build] Chevys in Europe, that's all part of the discussions we're having right now with the unions and works council," Stracke said.