For more than a decade, General Motors has been trying to turn around its European operations, which hasn’t posted a profit in well over a decade as a result of high costs and a contracting automotive market. But in the first quarter of 2016, GM Europe posted break-even financial results, marking a significant improvement over the $200 million it lost in the same quarter a year ago. Even more encouraging is that GM is planning on breaking even in the region for all of calendar year 2016.
“In Europe, we broke even in Q1 and we are on plan to break even for the calendar year,” GM Chairman and CEO Mary Barra says in a conference call outlining the automaker’s $2 billion first-quarter profit.
The improved financial performance is the result of a $5.2 billion plan that includes a new product offensive as well as cost-cutting measures launched in 2013. Even more promising is that GM’s European brands Opel and Vauxhall brands are growing faster than the industry.
“We are very pleased with the break-even result in Europe,” Says GM Chief Financial Officer Chuck Stevens. “The success of Opel’s recent launches has contributed to increased wholesales and related topline growth in the region.
“We’re also very focused on cost and we are utilizing tools such as operational excellence throughout the region, and you are seeing some of the results,” he says.
European car sales grew 5 percent in the first quarter, while deliveries by GM’s Adam Opel unit, which includes Vauxhall, jumped 8.4 percent to over 300,000 units, resulting in a market share growth of 0.2 percentage points to 6 percent compared to the same time period a year ago.
Barra says that the completely-redesigned, all-new Astra compact is a key part of the renaissance at Opel-Vauxhall. Based on GM’s D2 platform, the Astra was named Europe’s “Car of the Year 2016”, and over 150,000 orders have been placed for the vehicle. Next on the Opel-Vauxhall agenda is the launch of the Astra Sports Tourer (wagon) and the refreshed Mokka X subcompact crossover. GM also says that the Corsa subcompact car is gaining traction.