GM CEO Meets Merkel as Two Sides Bury Past Differences
General Motors Co. (GM) Chief Executive Officer Dan Akerson met with German Chancellor Angela Merkel to discuss the automaker’s Opel unit as the two sides worked to move past a dispute over a failed effort to sell the division.
GM, the world’s second-largest carmaker, said yesterday it plans to invest 4 billion euros ($5.25 billion) in European operations through 2016 as it adds models to increase market share and restore profit in the region.
“The chancellor welcomes yesterday’s announcement of the investment program,” Steffen Seibert, Merkel’s chief spokesman, said in a statement today. “She is convinced of the innovative capacity of the Opel workers.”
GM in 2009 backed out of a deal brokered by Merkel’s government to sell Opel to Magna International Inc. (MG) The next year, her government turned down a request from the American automaker for aid to reorganize its German operations. Akerson has been in Germany this week, publicly voicing his support for the struggling division.
The new spending will focus on developing 23 vehicles and 13 engines to reach a goal of breaking even in Europe by mid- decade, Akerson said at a press conference yesterday, following a rare meeting of the U.S. company’s board at Opel’s headquarters in Ruesselsheim.
“Our goal is to get it to break-even by mid-decade and we’ve made great strides in that arena -- you’ll hopefully read about it soon, this year, next,” Akerson said today during a presentation at the London School of Economics. “We are not quitting, tenacity pays off.”
GM’s European business, which consists primarily of Opel and Vauxhall in the U.K., has accumulated losses of $18 billion since 1999. Detroit-based GM’s earnings-revival strategy for the region includes the new models, partly in cooperation with French carmaker PSA Peugeot Citroen (UG), as well as spending cuts through measures such as shutting Opel’s car factory in Bochum, Germany.
Efforts by the GM brands to become profitable have been hampered by a European car market that’s set to shrink for a sixth consecutive year in 2013. Opel’s first-quarter sales in Germany fell 16 percent from a year earlier, outpacing an industrywide drop of 13 percent, with the contraction accelerating to 17 percent in March, according to the country’s Federal Motor Vehicle Office.
The carmaker hired Karl-Thomas Neumann, formerly head of Chinese operations at German carmaker Volkswagen AG (VOW), to become head of the European operations and CEO of Opel in March.
GM rose 4.8 percent, the most in more than three months, to $29.72 at the close in New York. The shares have gained 3.1 percent this year, trailing the S&P 500 Index’s 12 percent gain.
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