General Motors Co., the world’s largest automaker, said it will take two to three months to announce a restructuring plan for its money-losing European operations.
Karl-Friedrich Stracke, head of GM Europe and chief executive officer of Opel, told reporters at the Geneva motor show that the automaker sees “high urgency” to fix its operations in the region, which lost $747 million last year before interest and taxes. The Detroit-based automaker’s plan until November was to break even in Europe.
“Two to three months I think we need, for sure, before we can speak more precisely on further details,” Stracke said. “We need to engage every stakeholder in the next two to three months to prepare for any decisions.”
GM said yesterday it will pay about 320 million euros ($420 million) to acquire 7 percent of PSA Peugeot Citroen, Europe’s second-largest carmaker. The two companies are forming an alliance for purchasing and vehicle development to reduce costs by about $2 billion annually within five years.
The partnership with Paris-based Peugeot won’t preclude GM from shrinking its operations in Europe, Stracke said.
“This alliance is not set up to fix anybody’s capacity issue,” he said. “That needs to be done by everybody engaged here. PSA will address theirs and we need to address ours.”
Chief Executive Officer Dan Akerson said last month that GM would craft a plan for Opel “in the next couple of months.”
GM slid 5.5 percent to $24.58 at the close in New York.
GM has opportunities to reduce its fixed costs before labor contracts in Europe that expire in 2014, Stephen Girsky, chairman of its Opel supervisory board, said in an interview in Geneva. Those cuts don’t have to be from closing plants or breaking contracts, he said.
Peugeot and GM’s combined purchasing budgets are about $125 billion for materials such as steel, glass, rubber and finished parts, according to a Feb. 29 slideshow presentation. Savings on materials costs “will take time to develop” as the automakers introduce new products, said Girsky, who is also a GM vice chairman.
GM and Peugeot’s agreement, which focuses initially on small and midsize cars, multipurpose vehicles and crossovers, calls for at least four products to be manufactured within four years or planned for production within the following 18 months.
“Near-term restructuring by GM in Europe is going to be largely incremental,” Peter Nesvold, a New York-based analyst at Jefferies & Co., said last week in a phone interview. “Most obvious fat has already been trimmed.”