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Opel Takes Over GM Europe Operations

New change brings focus on entry-level small cars.

by on Jul.22, 2014

GM folded its European operations in the newly branded Opel Group as part of its plans to return to profitability.

General Motors plans to make its European operations profitable are taking shape as the automaker has rebranded its European unit as the Opel Group and a renewed its focus on small, profitable cars.

The re-branding took effect July 1. The new organization is based in Rüsselsheim, Germany, and will also oversee Chevrolet’s operations in Russia and Cadillac in Europe.

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“Today, we are more than just Opel/Vauxhall,” Karl-Thomas Neumann, CEO of the management board of Opel Group, said in a statement. “With the Opel Group, we align our organizational and legal entity structure in Europe with the business operations.

“We streamline our decision-making processes and increase our efficiency. In brief: this reorganization is an important step in implementing our business plan DRIVE! 2022 and another sign of confidence of our parent company GM.”

The irony of rebranding all of its operations in Europe under the Opel name is tough to ignore as it was just a couple of years ago that GM was contemplating selling off the German company.

GM has been losing money in Europe for more than a decade: $18 billion since 2002. It set of goal to reversing that by the middle of this decade. GM Europe reported a $284 million loss before interest and taxes in the first quarter. Much of that was tied to restructuring costs attached to the closing of the maker’s plant in Bochum, Germany. The company’s second-quarter earnings are set for release Thursday. It’s expected to lose money for all of 2014.

Opel/Vauxhall sales increased 3% in the second quarter. Sales were up 4% in the first half and Opel gained share in 11 European markets. In addition, the Mokka was the best-selling SUV in the first six months of the year in Germany.

GM has noted that it wants to have 8% market share in Europe and profit margins of 5% by 2022. Apparently, the key to that is the introduction of a small, affordable car that can be purchased by young, first-time buyers. GM sold more than 1 million cars in Europe in 2013.

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Low-cost brands, such as Skoda and Dacia, have sold well in Europe, which is struggling with the impact of austerity plans, reported Automotive News. The trend hasn’t gone unnoticed by Opel leadership.

(Click Here for details about GM’s efforts to capture global sales lead.)

While no formal plans have been announced, they are in the works. In fact, last month, Neumann said the automaker was contemplating a low-cost car to draw buyers away from other value brands, Automotive News reported.

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The automaker said Adam Opel AG is unaffected by the changes. Opel has more than 35,000 employees, 11 plants and four development and testing centers. GM President Dan Ammann remains the head of the Adam Opel AG supervisory board, and Opel CFO Michael Lohscheller and Neumann will join it.

Earlier this year, GM announced plans to invest $5.5 billion in its operations there to produce 23 new models and 13 new engines during the next several years.

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