General Motors Europe is on track to meet its objective of reducing its overhead by EUR500m a year by the end of 2006, writes Chris Wright.
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Jonathan Browning, vice president sales, marketing and aftersales GME and chairman, Vauxhall Motors, said that cost savings were being achieved mainly through labour reductions which will be continuing this year.
The restructuring effort was announced late 2004 to get GME back on track financially.
“Labour reductions have been the largest component in terms of reducing the overhead but we have also been looking at other things such as parts operations and warehousing where we are now working with Caterpillar to improve efficiency.”
Labour reductions have been achieved, he said, through early retirement programmes and there have been no forced redundancies. The GME workforce will be reduced by between 10,000 and 11,000 by the end of this year, with Opel employees in Germany bearing most of the cuts.
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By GlobalData“There are no plans at the moment to close any of our plants,” added Browning.
“The restructuring gets our footprint to a better balanced position but we have got to continue to look at our product cycle and business cycle and see how it progresses – you can never say never.
“Progress so far has been good although you can never be satisfied. There is more work to do in terms of material and structural costs and a complete revival has to be product-based.”
Key to this, he said, was the performance of Astra and Corsa in the volume markets.
“Astra is very good now, with great design and driving dynamics and is bringing new technologies to the segment, such as adaptive forward lighting, and that’s the sort of statement we want to be making with all our products.
“New Corsa comes later this year and we want that car to have the same impact. Volume drives our business which is why Corsa and Astra are so important to us. Vectra, Agila, Meriva and Zafira are all important members of the family but our heartland is the two smaller cars.”
Around Europe, GME UK subsidiary Vauxhall performed strongly in 2005 taking number one position in the fleet sector and closing the gap on Ford in retail sales.
GME’s cars are sold under the Opel brand elsewhere in Europe while some exports are shipped out with Chevrolet or Holden badges, too.
“Germany was our big concern,” added Browning. “It was not looking good three years ago but we managed to displace Mercedes-Benz as number two in the market last year. We achieved number two in Italy but we would like to do better in France and Spain.”
Outside Western Europe performance was looking particularly good, he said.
“We have good value products to offer with the Opel and Chevrolet brands and Poland, Russia and Turkey are becoming very important. Each would appear in anyone’s list of top 10 improving markets globally. A big surprise is Romania where vehicle sales are getting close to the volumes in Poland.”
In Russia GME sales have grown from less than 2,000 vehicles a year five years ago to 19,000 in 2005, discounting vehicles made there in the joint venture with AvtoVAZ.
“We expect to keep growing very quickly to 100,000 vehicles a year in the future.
“We are able to offer three products below US$9,000 with the Chevrolet Matiz, Lanos and Aveo. There is also potential for premium models as well and we are already producing small numbers of Cadillac models at our SKD operation in Kaliningrad while Hummer is also doing pretty well in the market place.”
In the UK Vauxhall has shown good growth and Browning said there had been a good turnaround in customer acceptance. “The perception of the brand has improved considerably. Saab also had a tremendous year in the UK with 27,000 sales.
“With Chevrolet we increased volume slightly to around 19,000 vehicles in a market that was 5% down. Again there is a increasing understanding about what the brand offers – it is not about American gas guzzlers, but good value cars for the market.”
