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GM's losses narrow in Europe

by Lou Whiteman | Published May 3, 2013 at 8:49 AM

General Motors Co. on Thursday reported first-quarter results that included surprising improvement in Europe, raising hopes that the automaker's long restructuring effort on the Continent is starting to bear fruit.

Detroit-based GM, which has suffered through 13 years of losses in Europe, said it lost another $175 million in the region in the first three months of 2013. But that result is less than half of what analysts had expected the company to lose in Europe, and dramatically better than the $462 million loss archrival Ford Motor Co. just recorded there.

Overall, GM reported an $865 million profit on sales of $36.9 billion, as the company continued its turnaround following a 2009 government-assisted bankruptcy. Even as GM has shown steady improvement elsewhere, its European unit has remained an albatross, but the company now says it expects to be break even there by mid-decade.

"The year is off to a solid start as we increased our global share with strong new products that are attracting customers around the world," GM chairman and chief executive Dan Akerson said. "In addition, we saw progress in Europe thanks to strong cost actions and great vehicles like the Opel Adam and Mokka."

But even with the success of those new vehicles it is not smooth sailing for GM in Europe, a region where economic hardship and declining rates of auto ownership have all automakers scrambling to cut costs and reduce capacity. Akerson last month committed to invest €4 billion ($5.3 billion) in the company's Adam Opel AG European operations to support the unit's recovery, and weeks later finalized plans to close a plant in Germany after GM was unable to win worker approval for a wage freeze.

GM has had a shaky relationship with Opel in recent years. The automaker had planned to sell Opel during the parent's 2009 restructuring, but reversed course and instead committed to spend an initial €3.3 billion to restructure the business.

That decision has been criticized in years since as the company has continued to struggle in Europe. Some analysts have suggested GM should eventually revisit the Opel decision, hopefully finding a buyer for the European operation and in its place marketing Chevy vehicles manufactured elsewhere in the region.

The improving results in Europe, should they continue, will ease the pressure on Akerson whether GM ultimately decides to keep Opel in-house or put it on the block.

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GM's losses narrow in Europe

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