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GM reduces European losses

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GM reduces European losses

Paul McVeigh

Automotive News Europe -- May 17, 2010 15:29 CET

General Motors Co. said its European operations lost $500 million before interest and taxes in the first quarter, an improvement of $300 million from the fourth quarter of 2009.

GM decided to keep its money-losing Opel/Vauxhall European unit last November instead of selling it to Canadian auto parts supplier Magna International Inc. and its Russian partners.

GM is now is seeking state aid from European governments to restructure the unit to bring it back into profit next year.

GM plans to cut European capacity by a fifth and is seeking the lion's share of loan guarantees toward a 3.3 billion euro restructuring from Germany, where Opel and half of the carmaker's 48,000 European workers are based.

Opel CEO Nick Reilly expects a final answer from Berlin by the end of this month. He said last Friday that generous contributions from other main Opel countries -- likely Spain and the UK -- meant that GM might need less than 1.3 billion euros ($1.6 billion) from Germany.

Like its parent, Opel/Vauxhall suffered when the economic crisis hit new-car sales. Last week, Opel Deputy Chairman Klaus Franz said PricewaterhouseCoopers had certified that Opel was profitable until September 2008.

Opel/Vauxhall's new-car sales in Europe fell 3.5 percent to 340,888 in the first four months, according to ACEA, the European carmakers association.

Read more: http://www.autonews.com/article/20100517/ANE/100519882/1193#ixzz0oCMEo8fv

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