GM’s board of directors held its regular meeting earlier this week in Russelsheim, rather than Detroit, to rubber-stamp the investment, which the auto maker first announced in June 2012 without a firm cost estimate.
Opel Supervisory Board Chairman Steve Girsky addresses Russelsheim employees today.
today puts a price tag of $5.2 billion (€4 billion) on the auto maker’s turnaround plan for its struggling Adam Opel unit in Europe that calls for investment in 23 new products and 13 new powertrains in the region through 2016.
“As a global automotive company, GM needs a strong presence in Europe in terms of design and development as well as manufacturing and sales,” GM Chairman and CEO Dan Akerson says in a statement, confirming the investment at Opel headquarters in Russelsheim, Germany.
“Opel is a key to our success and enjoys its parent company’s full support.”
GM’s board of directors held its regular meeting earlier this week in Russelsheim, rather than Detroit, to rubber stamp the investment, which the auto maker first announced in June 2012 but without a firm cost estimate.
The plan, which includes Opel’s Vauxhall sister brand in the U.K., includes a new marketing approach for Opel and the export of its products outside of Europe.
GM’s board also received an update on Europe’s weak new-vehicle market and met with economists, unionists and politicians.
GM executives will meet Thursday with German Chancellor Angela Merkel, an Opel spokesman confirms to WardsAuto. The topic will be GM’s commitment to Opel, but the auto maker will not be seeking financial aid as it did in 2009 when a divestiture of the unit was planned. GM later reversed that decision and chose to restructure Opel on its own but speculation continued whether it would still retain the unit.
It is unclear if Opel’s assembly plant in Bochum, a key element of GM’s strategy to reduce its manufacturing capacity in Europe, will be part of the discussions with Merkel.
The union at Bochum rejected a wage freeze earlier this year that would have kept the facility open until 2016. It now appears GM will shutter the operation as soon as next year. More than 3,000 jobs are at stake.
Opel has racked up $3.8 billion (€2.9 billion) in losses since GM exited bankruptcy in 2009, as the new-vehicle market in Europe failed to emerge from the global recession.
Light-vehicle deliveries in Western Europe slid 8.7% last year to 13.1 million units from 14.4 million in 2011, according to WardsAuto data. However, LV sales in the region tumbled 22.1% between 2007, the last year before the global recession, and 2012.
Opel sales declined 40.0% in the period, while its market share shrank to 4.6% from 6.0%.
To speed Opel’s turnaround, GM last year entered into a cost-cutting alliance withPeugeot Citroen of France expected to save $2 billion (€1.5 billion) annually within five years.
Opel ranks as the second-largest GM brand behind Chevrolet.