Opel: Here’s Our Strategy for European Profits
General Motors’ (NYSE:GM) Opel unit in Europe is likely to make some changes that could help reverse its decade-long streak of losses, according to Opel chief executive Karl-Friedrich Stracke.
Don’t Miss: Will BHP Be Forced to Write Down Shale Assets?
Stracke made it clear that the number of plants manufacturing the new-generation Astra would have to be reduced from three to two, in view of the current under-utilization of their capacity. “In light of expected demand, it only makes economic sense to have two Astra factories,” Mr. Stracke said.
However, he clarified that Opel would stand by its agreement with workers not to shutter any factories before 2014.
One strategy being considered is to utilize the excess capacity to build Chevrolet cars, which have been selling better, and are currently imported into Europe from South Korea and elsewhere.“We are in talks with our colleagues in Detroit and Shanghai to find out whether we can build Chevrolet vehicles in Europe, to improve utilization of capacity,” Stracke said.
In a third prong to the strategy, Opel is trying to spend its way out of troubles, investing almost $14 billion in new models that include a small car, the Adam.
In another difficult endeavor, Opel would try to build up an export market for its vehicles in new markets such as Australia, Latin America, and the Middle East.
Investing Insights: Subprime Mortgages Take Another Victim.