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Oracle of Delphi

No global future for Europe-only Opel, GM CEO says

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This is what happens when you bite the hand that feeds you. Don't be surprised if Opel headquarters are moved to the UK in the future. Vauxhall remained loyal, and may reap the benefits of that.

Henderson refuses to talk about future of individual plants

November 10, 2009 21:46 CET

RUESSELSHEIM (Reuters) -- General Motors Co. crushed hopes on Tuesday that Opel would play a greater role within its vast empire. CEO Fritz Henderson also offered vague assurances that Detroit would give its European carmaker more freedom.

Speaking to reporters late on Tuesday, Henderson showed little interest in marketing Opels outside the strict confines of Europe or even elevating the unit's status from a limited liability company to an incorporated stock company as proof that the carmaker would gain a greater measure of self-determination.

"We have a strategy in Brazil around Chevrolet ... It's a strong brand; the last thing we usually need is another brand," he cited as an example during a news briefing.

"Opel is a regional brand and I don't see that changing. That doesn't mean I'm closed to ideas about how it can be used elsewhere; but the measure of the Opel brand's success will be Europe, because if you don't win here all the discussion of exports will be irrelevant," he said.

Henderson arrived at Opel's headquarters in Ruesselsheim on Monday to repair relations, but he offered little in the way of incentives to German unions and politicians, who have demanded greater autonomy from Detroit's headquarters in exchange for their support of Opel's restructuring.

Berlin has indicated that a key condition of state aid is ensuring that German funds are spent in Europe on Opel. The government also wants GM to provide a water-tight legal separation between it and Opel to prevent any suspicion that German cash is being leaked to Detroit.

Cost to fix Opel debated

The GM CEO also refuted estimates from the Moody's rating agency that the total funding need for Opel was $8.5 billion, well above the $6.1 billion a study commissioned by GM's board had estimated.

"I have absolutely no idea where those numbers came from. That's not what we think is required -- we think what's required is about 3 billion euros (currently about $4.5 billion) in total," Henderson said.

Magna's plan required 4.5 billion euros. GM's lower estimate has caused fears in Europe that the U.S. automaker is more interested in the long-term success of core brands such as Chevy at the expense of its European marque.

More cash coming

The GM CEO said he would not starve Opel of investments, factoring into his plans spending levels of more than 1 billion euros a year to maintain the brand's current model and engine range. But he characterized that figure as a forecast and not a commitment.

The GM CEO refused to answer any questions about the future of individual plants or the distribution of job cuts expected to affect about a fifth of the 50,000 European workers ahead of a restructuring plan that should be finished in the next quarter.

He also deflected fears that next year's expected sharp slump in the European car market, once government-sponsored scrapping incentives are absent, could prove fatal for GM's Opel plans.

Henderson answered that the company would finally now be in a position to build to demand in 2010, since Opel had already slashed production massively to shrink stocks of unsold cars.

"Once we are done reducing our inventory, we will be stable -- and we will have that done by the end of this year. So even if the market next year is down, our level of production might very well be up," the GM CEO said.

Link: http://www.autonews.com/apps/pbcs.dll/arti...paign_id=alerts

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