OK, maybe it is a little hyperbolic to suggest General Motors Corp. is profitable again, but at least its European unit will end the year in the black.
The news gets better, the Opel and Vauxhall brands are slated to make even more money next year, the company said. GM has experienced strong growth in Russia, which is contributing to the European unit's success. GM expects to sell 120,000 cars in Russia this year, and expects to sell 180,000 next year, according to a Dow Jones report.
GM Europe like its U.S. counterpart struggled most of last year losing money in 2005. Nonetheless, the Russian sales helped the company earn $196 million for the first three quarters of 2006, compared with an $183 million loss in 2005.
The news is an interesting turn of events. After all, the automotive market in Europe is even more crowded than the U.S. marketplace with not only the same Japanese makers and GM and Ford as in the North American market, but also unfamiliar brands such as Fiat, Renault, Skoda, Smart, and various other European-only makes. As a matter of fact, GM's biggest European brand, Opel, doesn't even exist in North America — unless you consider the recent trend to rebadge Opels as Saturns.
In addition, GM Europe has successfully beaten back Asian imports despite a weak exchange rate between Asian currencies and the Euro. The weaker Asian currencies give Japanese and Korean car makers an advantage when exporting cars to Europe. Nonetheless, GM Europe chief Carl-Peter Forster told Dow Jones he remains concerned about the issue.
So why hasn't CEO Rick Wagoner taken a trip to meet Forster and see what makes Opel/Vauxhall different than its U.S. siblings? Clearly Europe's socialized health care is not the only reason the European business is thriving as car sales must be brisk in order to compete with more rivals.—Matthew Wurtzel
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