Reducing production capacity by 15% (300,000-350,000 units) by either closing a major assembly plant [rumoured to be Antwerp in Belgium] or "resizing" several others are among Opel's plans to achieve revenue and cost improvements in excess of two billion Euros over the next two years.

The details of the 'Olympia' project to return Opel to profit were presented to the company's supervisory board today by the new chairman and managing director Carl-Peter Forster.

In a veiled reference to the closure of the Vauxhall Luton plant in England and the axe apparently hanging over the Astra plant in Antwerp, Belgium, Opel said in a statement that "the company's evaluation of future market demand and the matching manufacturing capacity planning have been reviewed and adjusted so that Opel//Vauxhall can run at a higher capacity utilisation rate and operate profitably.

"In addition to measures announced at the end of last year, the overall capacity of Opel's and GM's European vehicle manufacturing network will need a further adjustment by some 15%, equaling 300,000 to 350,000 units, by the end of 2003.

"In order to implement such a reduction, one major assembly plant would need to be closed, or alternatively, several facilities would have to be resized. Independently, every single GME manufacturing plant will have to take aggressive action to further improve efficiency and productivity levels to reach world-class standards.

"A subsequent impact on the company's powertrain requirements cannot be excluded, but further analysis needs to be undertaken in cooperation with the Fiat-GM Powertrain joint venture company.

Opel plans to outsource specific stamping, tool and die, and component operations and is also looking for an external partner for its facility management business across Europe.

Major restructuring plans are also being developed for the sales and general administration areas in Europe, leading to further reductions in salaried headcount levels.

Other major initiatives of the revival plan include a strong emphasis on the Opel brand, focusing on its German engineering heritage.

Opel also plans a revitalised product range which will includes various "expressive special" models and new niche and segment-defining vehicles.

Strategic Review-

General Motors

The German GM operation will expand the successful OPC and ECO sub-brands, which cover sporty variants, such as the Astra OPC and the OPC X-Treme show car, and the super-economical turbodiesel Astra ECO4. Opel will spend more than 10 billion Euros developing new vehicles over the next few years.

New advertising will be rolled out shortly with the aim of clearly distinguishing Opel's corporate and product communications.

A brand identity update (think badges, logos and dealership designs) will be gradually implemented from the autumn while motor sport and sponsorship is also being reviewed.

Opel also plans to redefine its entire approach to selling vehicles.

Starting with the Zafira minivan this autumn, the company plans to aggressively introduce a speeded up order-to-delivery system for its entire range of vehicles.

Customers will be able to take delivery of the vehicle they ordered to their exact specification, with the dealer and Opel adhering to promised delivery dates and significantly shorter delivery times.

Opel also plans to continue with e-sales, as indicated by the recently announced Opel Webk@uf activity and AOL partnership. Similar activities are underway at Opel's sister company Vauxhall which is one of the leading manufacturer e-tailers in the UK.

In Germany, Opel's distribution setup will be restructured to improve sales and service capabilities and strengthen the profitability of the remaining core distribution network. Some aspects of the restructuring will be implemented in other European countries.

Opel will also go after what it terms "downstream revenue opportunities" - parts and accessory sales, financial services, leasing, infotainment, and used car marketing.

The Olympia plan (named for a famous Opel model line-up discontinued in the 1970s) is also focusing on reviewing all key business processes in the company.

For example, the company is embarking on strengthening its supplier relations. By partnering with the suppliers and involving them early in the design phase, Opel wants to take advantage of innovative supplier ideas aiming at improving quality, significantly increasing material cost savings and increasing innovation in its vehicles. A similar strategy to work with suppliers on current products is also being put in place.

"As we made clear at the outset of 'Olympia' a short while ago, some difficult steps must be taken in order to address the company's current financial situation," said Forster.

"But at the same time, tremendous emphasis is being put on initiatives and activities to reposition Opel and GME for future success and growth. That perspective makes it somewhat easier to make the sometimes painful decisions that inevitably are part of such a turnaround situation."

'Olympia' is currently being discussed with Opel and GM's European employee representatives before final decisions are made.

To view related research reports, please follow the links below:-

The world's car manufacturers: A financial and operating review

Automotive regional report: Western Europe

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