{"id":288295,"date":"2011-03-03T00:02:53","date_gmt":"2011-03-03T00:02:53","guid":{"rendered":"http:\/\/www.ghanamma.net\/2011\/03\/03\/gm-gets-ready-to-fix-european-side\/"},"modified":"2011-03-03T00:02:53","modified_gmt":"2011-03-03T00:02:53","slug":"gm-gets-ready-to-fix-european-side","status":"publish","type":"post","link":"https:\/\/www.ghanamma.com\/2011\/03\/03\/gm-gets-ready-to-fix-european-side\/","title":{"rendered":"GM gets ready to fix European side"},"content":{"rendered":"<p><div readability=\"166.847624456\">\n        \t\t  <span><br \/>\n    <span>2 March 2011<\/span><br \/>\n<span>Last updated at <\/span><span>19:02 ET<\/span><br \/>\n<\/span><\/p>\n<p>\t\t\t\t\t            \t            \t    \t\t \t\t\t<span><br \/>\n\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" src=\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/301cb01334_dsc_0719.jpg\" alt=\"Jorn Madslien\" \/><span>By Jorn Madslien<\/span><br \/>\n\t\t\t\t<span>Business reporter, BBC News, Geneva motor show<\/span><br \/>\n\t\t\t<\/span><\/p>\n<p>Having emerged both leaner and stronger from bankruptcy in 2009, the US-based automotive giant General Motors (GM) is firmly back on its feet.<\/p>\n<p>The company is making a profit again, its global sales are powering ahead, and it is so confident about the future that it recently withdrew an application for $14.4bn (\u00a38.8bn) of cheap loans from the US government.<\/p>\n<p>&#8220;It does send a signal,&#8221; says motoring analyst Itay Michaeli from Citi Investment Research, &#8220;that this company is running things on their own.&#8221;<\/p>\n<p>As the Geneva motor show gets underway in Europe, however, it is clear that GM&#8217;s challenges remain largely on this side of the pond &#8211; especially in Germany.<\/p>\n<p>  <span>German backlash<\/span><\/p>\n<p>With just less than 13.4 million cars sold, the overall European market &#8211; which was hit by the end of scrappage schemes that were widespread in 2009 &#8211;  <a href=\"http:\/\/www.acea.be\/images\/uploads\/files\/20110114_PRPC-FINAL-1012.pdf\">shrunk 5.5% last year, according to ACEA,<\/a> the European automobile manufacturers&#8217; association.<\/p>\n<p>Sales of GM&#8217;s European brands fell roughly in line with the rest of the market, with one notable exception. In Germany, Opel sales fell 29.5% in 2010 to some 270,000 cars.<\/p>\n<p>In the past, much of the loyalty to the brand in Germany had been linked to Opel being seen as a local manufacturer.<\/p>\n<p>Hence, when GM Europe started cutting costs, laying off workers and threatening factory closures, many &#8211; both customers and workers &#8211; felt let down.<\/p>\n<div>\n\t<a href=\"http:\/\/www.bbc.co.uk\/news\/business-12625841#story_continues_2\">Continue reading the main story<\/a>\t\t<\/p>\n<h2>GM sales in Europe<\/h2>\n<p>\t\t<!-- pullout-items--><\/p>\n<p>\t<!-- pullout-body--><\/p>\n<ul>\n<li> 2009: 1,263,328<\/li>\n<li> 2010: 1,166,894 (down 13.9%)<\/li>\n<\/ul>\n<p>Source: ACEA<\/p>\n<p>\t<!-- pullout-links-->\n\t<\/div>\n<p>&#8220;As far as the overall image in the market place [is concerned], it was affected mostly in Germany,&#8221; Nick Reilly, chief executive of GM Europe, told BBC News in an interview at the Geneva motor show.<\/p>\n<p>Matters were made worse when a drawn-out plan to sell Opel and its sister-marque Vauxhall ended abruptly and acrimoniously in 2009, with the German government, which had offered financial backing for the plan, left hanging.<\/p>\n<p>As GM Europe&#8217;s restructuring plan is nearing completion, with a much reduced cost structure in place, the task now is to regain trust and loyalty.<\/p>\n<p>&#8220;We&#8217;re working hard at that,&#8221; says Mr Reilly, insisting that relations with the German government have been patched up.<\/p>\n<p>&#8220;They know we&#8217;re investing in Germany. We&#8217;re hiring engineers. We are one of the most advanced companies in the industry on electrification of vehicles. So the somewhat unfortunate occurrences of the last year I think are behind us.&#8221;<\/p>\n<p>  <span>Overcapacity in Europe<\/span><\/p>\n<p>GM&#8217;s effort to revive its European brands cannot rely on any expansion of European production capacity and thus large-scale job creation.<\/p>\n<p>&#8220;The industry still has a lot of overcapacity in Europe,&#8221; says GM&#8217;s chief financial officer, Chris Liddell.<\/p>\n<p>&#8220;The chances of us adding capacity in Europe over the next couple of years are slim.&#8221;<\/p>\n<p>Moreover, though profit margins in the US seem solid now that the burden of healthcare costs equivalent to about $2,000 per vehicle has been lifted, in Europe competition remains fierce.<\/p>\n<p>So GM is unlikely to make the sort of profit margins that it does in North America, Mr Liddell acknowledges.<\/p>\n<p>&#8220;I think that&#8217;s going to be very difficult given the industry dynamics,&#8221; he says, pointing to additional pressures from rising costs.<\/p>\n<p>&#8220;It&#8217;s not just higher fuel prices for consumers, it is also commodity prices,&#8221; he says.<\/p>\n<p>&#8220;Commodity price inflation, mainly steel prices, has become a concern across the board.&#8221;<\/p>\n<p>  <span>&#8216;Break even this year&#8217;<\/span><\/p>\n<p>So to lure back customers in Europe, GM will have to rely on its ability to make better cars.<\/p>\n<div readability=\"24.917721519\">\n\t<a href=\"http:\/\/www.bbc.co.uk\/news\/business-12625841#story_continues_3\">Continue reading the main story<\/a>\t<\/p>\n<h2>\u201c<span>Start Quote<\/span><\/h2>\n<blockquote readability=\"5\">\n<p>We&#8217;ve got to get out of the market share driven mentality\u201d<\/p>\n<\/blockquote>\n<p><span>End Quote<\/span><br \/>\n\t<span>Chris Liddell<\/span><br \/>\n\t<span>GM chief financial officer<\/span><\/p><\/div>\n<p>&#8220;We&#8217;re very focused on new products, such as the Ampera &#8211; the world&#8217;s first extended-range electric vehicle,&#8221; says Mr Reilly. &#8220;Our new products are doing well.&#8221;<\/p>\n<p>Mr Liddell, however, believes there is still plenty of work to be done.<\/p>\n<p>&#8220;The quality of the product we have in Europe is probably better than the brand image,&#8221; he laments.<\/p>\n<p>&#8220;On the sales side, it&#8217;s all about the reinvigoration of the brand.&#8221;<\/p>\n<p>The carmaker has made great strides in recent years.<\/p>\n<p>&#8220;Every car we build now has to be first class. It has to be able to be a market leader in its segment,&#8221; says Mr Liddell.<\/p>\n<p>Armed with a new model line-up, Mr Liddell is hopeful that the turnaround can be swift in Europe too &#8211; the way it has been in the US and in Asia.<\/p>\n<p>He is not, however, prepared to sacrifice profits in order to bolster sales.<\/p>\n<p>&#8220;First and foremost, we&#8217;ve got to get out of the market share driven mentality,&#8221; Mr Liddell says, pointing to how GM used to offer large discounts to ensure it remained the world&#8217;s biggest carmaker by volume.<\/p>\n<p>&#8220;The focus has got to be on producing world-class vehicles on a profitable basis,&#8221; he says.<\/p>\n<p>&#8220;And the objective in Europe is still to break even this year.&#8221;<\/p>\n<\/p><\/div>\n<\/p>\n<p><img decoding=\"async\" src=\"http:\/\/www.ghanamma.net\/wp-content\/uploads\/2011\/03\/301cb01334_dsc_0719.jpg\" \/><\/p>\n<p>View original post here:<br \/>\n<a target=\"_blank\" href=\"http:\/\/www.bbc.co.uk\/go\/rss\/int\/news\/-\/news\/business-12625841\" title=\"GM gets ready to fix European side\" rel=\"noopener noreferrer\">GM gets ready to fix European side<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p> 2 March 2011 Last updated at 19:02 ET By Jorn Madslien Business reporter, BBC News, Geneva motor show Having emerged both leaner and stronger from bankruptcy in 2009, the US-based automotive giant General Motors (GM) is firmly back on its feet. <\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-288295","post","type-post","status-publish","format-standard"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.0 - 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