GM looking to create new pan-European company

[coolcaddy]

GM is looking to create a new pan-European company based in Belgium

October 26, 2004 6:11 PM GMT (Datamonitor) - Reports in the German press suggest that General Motors [GM] is considering setting up a new pan European company in its attempt to stay ahead in a fiercely competitive automotive market. The company is right to consider radical options: this will enable the loss-making European division to cut costs and simplify its complex management structure.

Over the past few years, GM has been facing problems with its European brand strategy and product line-up. Europe is crucial to GM as it accounts for approximately 20% of the company's global sales. However, in 2003, the European division made losses of $286 million.

The European auto market has become very competitive due largely to the success of the Japanese manufacturers, particularly Toyota. Within a saturated and competitive market, companies have to be innovative and respond quickly to any market changes. However the current complex structure of GM's European arm does little to facilitate the decision making process.

Over the past few months, the company has initiated a 'spring clean plan' to centralize the management of its three brands - Opel, Saab and Vauxhall - although each brand still operates as a separate legal entity. The group has also centralized all important vehicle design activities to Zurich in an attempt to increase efficiencies and save money.

Despite these changes, GM Europe's Q3 2004 results were still very disappointing, and the operation's losses over the past four years now amount to $2 billion. The losses racked up by the division since 1999 have finally prompted GM to consider a radical cost-cutting strategy, which would remove all autonomy from its three European brands and create a new European company in legal terms. The move would take advantage of a recently approved European Union rule that allows companies operating in multiple EU member states to have a unified management and accounting system.

Though such a step would risk courting criticism that GM is diluting the identity of some of its most successful brands, the company is right to be radical in acting to rein in costs. In a tough trading environment, GM must stem its losses or its status as one of Europe's top five selling automakers will come under serious threat.

source

[FoMoCo Fan]

I find it hard to believe the EU won't try to give them fits on this one.

[dav305z]

This is important. Ultimately, how eficiently GM organizes itself will decide whether or not it can compete long term against the Japanese and Europeans.

[awalbert88]

GM doesn't really have a single popular brand for Europe. Saab is doing alright, but not compared with the popularity of Ford, Volkswagen/Audi, Peugot/Citroen or BMW. Cadillac can make a dent in the luxury market, but I'm not sure how well any existing brand could do. Even if they are largely rebadged GM cars, a new brand could go a long way towards improving sales and the perception of quality - just look at Lexus or Infiniti.

[ibechip]

I think this is probably the only option left for GM.

[paul3230]

Yeah, it's getting down to the wire now. EU will probably give them some sort of hell for this. They won't let it be just that simple.

[quinnp12]

they gotta do something, no matter how extreme

[barcodedorganic]

why would the EU care about what GM does with it's brands?

as far as reorginaztion YES! it's about time...so that way you'll be able to keep up instead of operating as one hive mind you don't have to have the tentacles in everything just watching who's faltering and who's not...THEN creativity will happen