Special Coverage

Geneva
Auto Show

GENEVA – General Motors’ two extended-range electric vehicles, the Chevrolet Volt and Opel/Vauxhall Ampera, will go on sale in Europe in the fourth quarter, but they will not compete with each other, says GM Europe President Nick Reilly.

The 4-door sedans use the same basic technology but will have distinctive styling and different marketing plans, Reilly tells journalists in a roundtable discussion at the auto show here.

As Chevrolet is attempting to gain a foothold in Europe – and while GM has a considerable head start over rivals in the EREV segment – Reilly says consumer choices should not be limited to the Opel/Vauxhall version.

“(There) was no point in us bringing the Ampera and telling everyone who wanted a Chevy Volt, ‘You can’t have one because we want to sell you an Ampera.’ Because they would have said, ‘I don’t want an Opel. I want a Chevy. They’re sold in America and why can’t I have one?”’ he says.

Opel/Vauxhall launched a website recently to begin marketing the Ampera, and Reilly says within two weeks 3,000 people had signed up to buy one, including 800 private customers who placed deposits.

“We’ve got tremendous interest in it,” he says, adding the Ampera likely will have more fleet and government customers than the Volt, which is expected to be popular primarily among retail customers.

“Could they be wider apart?” Reilly asks theoretically with regard to Ampera and Volt marketing and styling. “Yep, and generation two will be wider apart.”

The first-generation EREVs will be in the market several years before the second generation arrives, around 2015 or 2016, he says.

At that point, Reilly expects Opel will produce the next EREV in Europe. Until then, the Ampera will come from the same GM plant building the Volt, in Hamtramck, MI, near Detroit.

“We won’t produce the generation-one car in Europe,” he says. “It’s not worth the investment.”

That announcement must be disappointing for Vauxhall employees who were counting on the Ellesmere Port, U.K., plant to assemble the current Ampera. Hundreds of jobs were hinging on the business.

Opel’s first home-grown battery-electric vehicle, a small city car, will be made at GM’s plant in Eisenach, Germany, beginning 2013, Reilly says.

GM’s top-ranking executive in Europe has led the auto maker through vast restructuring, cost-cutting and negotiations with labor unions and government officials in a bid to keep the German-based Adam Opel afloat.

Ultimately, after a failed attempt to sell Opel to supplier Magna International, GM decided to keep the auto maker and provide $4.5 billion of funding.

After a few harsh years, Reilly takes the glass-half-full view of the European operations, which lost $1.6 billion last year after initially forecasting a 2010 loss of $3 billion.

“Put 2010 and what we expect in 2011 together, and we’ll be well ahead of our financial plan,” he says.

The restructuring is 75% complete although capacity will be reduced later this year at an assembly plant in Bochum, Germany, and employees are being offered new positions if they transfer to Russelsheim, Germany, where the engineering center is hiring.

The last piece of the restructuring still to come is closure of a transmission plant in Bochum, likely at the end of the year, Reilly says. The plant was to be shuttered last year but was kept open because GM’s operations in Brazil ordered 100,000 transmissions from the facility.

By 2012 or 2013, Reilly expects capacity utilization rates at Opel manufacturing operations to exceed 100% on a 2-shift basis and to be slightly under 90% for three shifts.

In all, some 8,000 people have lost their jobs in the restructuring, offset slightly by the hiring of 250 engineers last year and an expected 250 more this year, he says.

GM has hired Alix Partners to assist in helping ferret out additional material costs and to identify other savings within the European operations. Reilly welcomes the help from Alix, which knows Opel well from its involvement in the proposed sale to Magna.

“We felt, given that we were fairly resource-constrained, it would be worth bringing in an expert in that kind of thing,” Reilly says. “Alix has a very good track record. We think it’s an investment worth making.”

Tim Urquhart, senior analyst with IHS Automotive in London, says Opel remains a “weak link,” but that GM needs Opel to maintain a truly global presence, to compete with the likes of Volkswagen.

“It is a furiously competitive market and Opel plays right in the C- and D-segment, and it is very hard there,” Urquhart says. “They are getting squeezed from above and below.”

He says GM also needs Opel for its product-development capabilities, and he credits Opel workers for buying into the restructuring.

“They (Opel) are as efficient as they can be on cost,” Urquhart says.

A top priority now is to generate revenue and remain focused on keeping the product fresh. Opel’s market share is growing throughout Europe, helped along by popular new vehicles such as the Meriva. Reilly expects further improvements with the impending arrival of the 3-door Astra GTC and Zafira.

“The worries over Opel surviving, etc., went away quite quickly, and our new product was well received,” he says. “The problem was in Germany, where the image has taken a pretty serious bashing. It takes a long time to build a brand back up – not that long to damage it.”

Given the emotional nature of the Opel negotiations, Reilly estimates it will take five years for the whole of Germany to feel good about Opel again.

“That doesn’t mean you don’t improve every month,” he says. “I think we’re starting to see the consideration rates going back up already in Germany. There’s tremendous goodwill toward Opel by most people in Germany. It’s an iconic brand that’s been around a long time, that’s been very successful.”

Reilly was pleased at the show here to host a distinguished visitor – his boss, GM Chairman and CEO Dan Akerson.

After walking the show floor, Akerson had a day of meetings with GM executives and then spent Thursday visiting the plant and engineering center in Russelsheim.

– with James M. Amend

tmurphy@wardsauto.com