GM Europe's Reorganization Is Ahead of Schedule, Division Head Reilly Says

General Motors Co.’s European division is reorganizing faster than planned as higher car prices help limit losses this year, according to Nick Reilly, the head of the unit.

The division, which includes the Opel brand based in Ruesselsheim, Germany, and Vauxhall in the U.K., will lose $1.9 billion in 2010, compared with a forecast loss of $3 billion at the beginning of the year, Reilly told reporters last night in London. He reiterated that the business has “a chance” of making money in 2011, excluding reorganization costs.

“We are considerably ahead in the underlying business,” Reilly said. “We have more volume, and average transaction prices have gone up based on new products.”

GM Europe is the only unprofitable division of General Motors following the Detroit-based carmaker’s reorganization that included shuttering or selling four brands worldwide. Opel and Vauxhall have revamped their Astra compact and introduced the Insignia sedan as they struggle to gain back market share after GM unsettled potential car buyers last year when it considered selling the automakers.

The U.S. company pledged in February to invest 11 billion euros ($15 billion) in Opel and Vauxhall through 2014 to make them more competitive. General Motors returned to the stock market yesterday in an initial public offering exceeding $20 billion, 16 months after emerging from Chapter 11 bankruptcy protection in the U.S. The IPO was the country’s second-largest ever, after Visa Inc.’s $19.7 billion sale in March 2008.

The biggest challenge for GM in Europe, especially in Germany, is improving the brands’ reputation after the division sought government aid, Reilly said.

To contact the reporters on this story: Steven Rothwell in London at srothwell@bloomberg.net; Cornelius Rahn in Frankfurt at crahn2@bloomberg.net.

To contact the editor responsible for this story: Kenneth Wong at kwong11@bloomberg.net

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