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March 3, 2010

GENEVA INTERVIEW: Reilly under no illusions over new GME job

Former GM China and Vauxhall UK chief Nick Reilly is under no illusions over the size of his new job heading up General Motors' European operations.

Former GM Asia Pacific and Vauxhall UK chief Nick Reilly is under no illusions over the size of his new job heading up General Motors’ European operations.

The North American giant briefly went into bankruptcy protection last year and pulled out of a deal to sell its Opel and Vauxhall operations to Canadian automotive supplier Magna International in the summer.

Reilly has now been tasked with turning around the European operations and trying to persuade countries where it manufactures cars to provide funds or loan guarantees to help a return to profitability.

At the Geneva show, he was able to announce that has had some considerable success with the parent company’s bank – persuading GM to triple its funding of Opel and Vauxhall, enabling him to reduce requests for state aid.

GM will provide EUR1.9bn in equity and loans – up from the EUR600m first earmarked. This will see the European operations through this year.

Reilly gave a brief insight into life at GM as its financial plight came to the fore amid the economic crisis of the past 18 months.

He said: “Even though I was based in China to start with I visited the US once a month and the situation was very depressing. Also the animosity from the American public towards the company was much stronger than I expected. It wasn’t much fun!

“In Asia Pacific the money from the US dried up and I had to go around the banks looking for money to fund our expansion plans in the region. The image of GM took a bit of a beating and there was some infighting over things such as the proposed sale to Magna. Bankruptcy is pretty traumatic.

“But we have kept the company alive and come out of bankruptcy fast and taken substantial decisions in terms of cutting brands and plants. Without a doubt the old GM was too bureaucratic and too centrally controlled. We now have a new board, many of whom come from outside the auto industry and they are asking some difficult questions.”

As for the future Reilly said that the European operations still need to take out some capacity and that the biggest challenge of all will be the move towards the electrification of vehicles.

“People don’t realise how quickly this is going to happen and it will be led by Asia. There is an urgent need to downsize vehicles and reduce emissions. Asian countries will bring in legislation to achieve this, driving sales of environmentally friendly vehicles in very large numbers.

“Anybody who has concerns over infrastructure issues for such vehicles will be shocked by how quickly China will set it up.”

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