GM gives reins of European business to veteran VW exec
General Motors handed the reins of its struggling European business to a veteran Volkswagen executive.
Karl-Thomas Neumann, 51, was named president of GM Europe, chairman of the management board of GM's Germany-based Adam Opel and GM vice president. Neumann was most recently CEO of Volkswagen's flourishing China division.
He will report to GM Vice Chairman Stephen Girsky, who has served as interim president of GM Europe. Girsky said in a statement that Neumann brings "a proven track record" in revitalizing distressed automotive businesses. His appointment is effective March 1.
Neumann, who spent about 16 years at Volkswagen, takes over Opel from interim appointee Thomas Sedran, a turnaround specialist who replaced Karl-Friedrich Stracke, who was reassigned in July.
Neumann will "be instrumental in leading the company on a turnaround path that will be counted among Europe's most successful," said Girsky, who remains chairman of the Opel supervisory board.
GM has lost more than $ 16 billion in Europe over the last 13 years, including an estimated $ 1.5-billion to $ 1.8-billion loss in 2012. GM reports its full-year and fourth-quarter earnings Feb. 14.
GM's European vehicle sales fell 13.8% for the full year, worse than the industry's 8.2%, according to the European Automobile Manufacturers Association.
GM CEO Dan Akerson wants the automaker to reduce its European losses by one-third to one-half in 2013 and break even on the continent by mid-decade.
But Morgan Stanley analyst Adam Jonas said Tuesday that for GM, reducing losses in Europe "by even $ 1 is not an easy target." He suggested in a research note that GM's European losses could even double this year to $ 3 billion.
The goal to break even by mid-decade "while theoretically not impossible, is too bullish to bank on," Jonas said.
GM executives have rejected suggestions that they should sell Opel to reduce the automaker's exposure to Europe, where new car sales have declined for five consecutive years.
Last month, Akerson warned that European auto sales will weaken more this year and that Germany, which had escaped the brunt of the downturn, may be slipping into a recession.
Nearly one year ago, GM signed a partnership with French automaker PSA Peugeot Citroën to share vehicle development costs and combine purchasing and logistics in a deal expected to save GM $ 2 billion over five years.
The company also plans to close a plant in Bochum, Germany, as early as 2015, but analysts have suggested GM needs to close more factories sooner.
GM is banking on a new product strategy in Europe, which will get 23 new Opel models and 13 new engines through 2016. The company has been pleased by interest in the Adam minicar, Cascada convertible and Mokka crossover.
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