GM Vice Chairman Steve Girsky said that measures need to be taken to address large overcapacity in the European automobile industry. While the executive didn’t discuss plans for possible plant closures, he did say that the turnaround strategy for The General’s loss-making Opel and Vauxhall brands in Europe will be based on conservative estimates:
“We need to stop targeting overoptimistic goals and plan for unreachable market shares,” Girsky is cited as saying by newspapper Die Zeit last week.
The numbers of the turnaround strategy are only a part of the battle while the unit’s corporate culture is another. “If you’re posting losses for years that are always being compensated by the parent firm, then you get used to it and believe at some point that it is normal to lose money,” Girsky was quoted as saying.
The GM Authority Take
Mr. Girsky’s observations about corporate culture seem to be spot on, given that the European arm hasn’t posted a profit in years despite making some of the best vehicles on the road. Even so, we wonder how the Vice Chairman would address the claim that Opel’s troubles are simply of the accounting nature, where the unit gets charged for the development of certain technologies, architectures, and models (Opel Insignia and Astra) — but doesn’t see the profits when its models wear a different badge (Buick Regal, Verano/Excelle).