Mary Barra, the new chief executive officer of General Motors Company (NYSE:GM) expressed her absolute support for Opel, its subsidiary in Germany as part of the automakers renewed commitment in the European region despite facing challenges to revive its profitability.
Barra emphasized that Opel is a “vital part” of General Motors Company (NYSE:GM), and her first international visit as chief executive office to the headquarters of automakers’ subsidiary in Ruesselsheim is “no accident.”
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General Motors to invest $5.5 billion in Europe
According to Barra, General Motors Company (NYSE:GM) plans to invest approximately $5.5 billion or €4 billion in Europe through 2016. A majority of the investment will be allocated to fund new Opel models and engines.
Opel experienced difficulty in generating profits due to strong competition in the European market as it has been over-supplied with vehicles over the years. Consumer demand for new vehicles in the region was weak because of the weak economy and the increasing unemployment rate. Since 1999, General Motors Company (NYSE:GM) incurred $15 billion in cumulative losses from its operations in the region.
General Motors Company (NYSE:GM) restructured its operations in Europe to revive its profitability. The company decided to shut down its assembly plant in Bochum, and to wind down its Chevrolet brands except Corvette in Europe by the end of 2015 to boost the competitiveness of the Opel and Vauxhaull brands.
According to the European Automobile Manufacturer’s Association, the market share of Opel was flat at 6.8% while Chevrolet only accounts 1.2% in Europe during the third quarter. However, the Opel managed to gain market share during the latter months of 2013.
General Motors president Amman to serve as chairman of OSB
Barra visited Opel along with Dan Ammann and Steve Girsky, president and vice chairman of General Motors Company (NYSE:GM), respectively. Ammann has been nominated to replace Girsky as chairman of the Opel Supervisory Board (OSB).
“Steve led GM’s turnaround plan for Europe that has put that region’s operations back on a path to profitability. Dan Ammann will keep up this course – with the clear goal to break-even by mid-decade,” said Barra.