GM Europe Chief Says Marchionne’s Push for Change Is ‘Right’

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Adam Opel AG Chief Executive Officer Karl-Thomas Neumann
Adam Opel AG Chief Executive Officer Karl-Thomas Neumann. Photographer: Gianluca Colla/Bloomberg

General Motors Co.’s top European executive said Fiat Chrysler Automobiles NV Chief Executive Officer Sergio Marchionne is on the right track with his efforts to streamline the auto industry.

“He’s right,” Karl-Thomas Neumann, the head of GM’s Opel unit, said Thursday outside the German carmaker’s headquarters in the Frankfurt suburb of Ruesselsheim. “It doesn’t makes sense to develop things 10 times all over again. There is need to consolidate” in the car industry.

In an April 29 presentation, called “Confessions of a Capital Junkie,” Marchionne said the auto industry had a dim future because multiple manufacturers develop the same technology only to reap margins that are too thin to recoup their investment. After completing the deal that created the world’s seventh-biggest carmaker late last year, he has urged automakers to merge but has been rebuffed by other executives, including GM CEO Mary Barra. Neumann, who ultimately reports to Barra, said he also doesn’t see a deal with Fiat.

Marchionne is “absolutely sure” a merger will take place in the car industry by 2018, Italian newswire Radiocor cited the Fiat Chrysler chief as saying earlier Thursday.

Internal Efficiencies

While Marchionne has said a deal between Detroit-based GM and London-based Fiat Chrysler would be “technically feasible,” Barra has said America’s biggest automaker can earn better returns on its own. Neumann, a former executive at Volkswagen AG, said Opel is focused on creating efficiencies by making better use of GM’s resources.

“The industry needs to improve volumes, scale and utilization,” he said. Opel has mistakenly looked for such benefits outside GM in the past, while scale effects could be achieved by working within the parent company, Neumann said.

Opel has “redefined” some cooperation projects with France’s PSA Peugeot Citroen, he said. The alliance between Opel and Paris-based Peugeot has been scaled back in some areas and focuses on fields including purchasing, logistics and development.

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