In a move that appears to parallel Mercedes-Benz’s recent shake-up of its UK dealer network, General Motors’ German Opel subsidiary will send out termination notices to its 900-strong German dealer network next month, The Financial Times (FT) reported. The newspaper added that the move comes in front of a major restructure of Opel retail operations in Europe’s largest car market.

The FT said that GM Europe needs to reduce costs, including inventory, in its European distribution system which must be strengthened before changes to EC competition rules later this year.

At the end of September, the FT said, the European motor industry’s ‘block exemption’ from normal EU competition rules is being replaced by less rigid rules that mean greater competition in car sales and servicing.

The German Opel dealer network restructure is the latest step in GM Europe’s scheme to slash excess capacity in Europe by 500,000 units a year and save two billion euros ($US 1.8 billion), the FT said. The plan, called Project Olympia, is intended to return GM’s loss-making European operations to profit though it expects a loss of about $350 million this year, the newspaper added.

Citing GME president Michael Burns, the FT said that Opel would have 470 dealers in Germany after the restructure, operating about about 1,750 sales and service outlets, down from over 2,200.

The FT said that GM expects the new dealer network to achieve doubled sales and higher profit putting it in a better position to make the heavy investment in facilities – such as improved service – required to restore Opel’s poor image in Europe.

Opel dealer networks in other large European markets and Vauxhall in the UK have already undergone extensive rationalisation and will remain largely unaffected, the FT said.