The head of General Motors ‘ European operations reaffirmed on Tuesday that the unit will lose up to $US200 million this year, but will turn a profit in 2004, Reuters reported.
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The news agency noted that GM in January set a target for Europe to post results ranging from break-even to a loss of about $200 million, compared with a loss of $549 million in 2002.
“The intent is to stay within this window for 2003,” Mike Burns, the president of GM Europe, told reporters during a press briefing, according to Reuters. “Our goal is to cross over into profitability in ’04,” he added.
Reuters said that GM Europe lost $68 million in the first half of this year, and Burns suggested that losses would be steeper in the second half. “The second half of the year is always weaker in Europe,” he reportedly said, due to the holidays many Europeans take in late summer.
According to Reuters, Burns also said that GM Europe has failed to meet its stretch target for cutting material costs, and the strong Swedish kroner has hurt results for GM’s Saab unit. Just as in the United States, incentives are putting pressure on prices in Europe, to the tune of about one percent a year, Burns also reportedly said.
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By GlobalDataReuters noted that GM’s ongoing turnaround in Europe stands in contrast to Ford’s European operations, which lost $525 million before taxes in the second quarter. Ford started its restructuring of its European operations before GM did, and had recently been profitable, Reuters noted, adding that Ford blamed its heavy losses in Europe to pricing pressures, lower sales volumes and dealer stock reductions.
