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Automotive News Europe
February 4, 2015 14:16 CET

DETROIT -- General Motors said its fourth-quarter pretax profit rose 27 percent to $2.41 billion, its best fourth-quarter result since the 2009 bankruptcy. But the automaker failed to reduce its losses in Europe as headwinds in Russia hit its business.

GM said stronger pricing across its major markets and robust pickup and SUV sales in North America boosted earnings.

However, GM's loss in Europe widened to $393 million from $365 million in the fourth quarter of 2013, according to a statement.

Chief Financial Officer Chuck Stevens attributed the losses mostly to trouble in Russia, where a weaker ruble has made it more difficult for consumers to afford new vehicles, hurting sales.

"As we go through 2015, Russia will continue to be a headwind," Stephens said told reporters at GM's headquarters on Wednesday. "But we've taken and will continue to take aggressive action to mitigate those issues."

In Russia GM has laid off workers, plans to shut down its St. Petersburg assembly plant for nearly two months and made pricing adjustments to offset the current devaluation.

GM's full-year loss in Europe widened to $1.37 billion, from $899 million in 2013. Stevens reiterated GM's goal of returning its European operations to a pretax profit in 2016.

GM has been targeting its first profit in Europe in more than a decade but in December Karl-Thomas Neumann, head of its European and Opel operations, warned that the unit's 2016 profit target was under threat from economic setbacks.

Strong quarter

GM's $2.41 billion global pretax profit, which the company believes best reflects its underlying performance, excluded about $900 million in special charges, mostly related to the redemption of outstanding preferred shares. Including those charges, fourth-quarter net income rose 21 percent to $1.11 billion.
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GM Europe is being hit by two economic regions, Russia and the Eurozone, failing for very different reasons and neither likely to be resolved quickly. As GM Europe only has one main market outside those two regions, UK sales and Vauxhall Ellesmere Port remain the only bright spot.
 

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Discussion Starter · #3 · (Edited)
GM Europe is being hit by two economic regions, Russia and the Eurozone, failing for very different reasons and neither likely to be resolved quickly. As GM Europe only has one main market outside those two regions, UK sales and Vauxhall Ellesmere Port remain the only bright spot.
That's right Rupert, l noticed that UK assembled cars/trucks biggest two export markets is now China & Russia for the British assembled automobile, Russia are not in the EU though.

Personally l would like to see GM go after the higher apples up the tree more profitable end of the market it in Europe where lots of money is being made Rupert i.e. like the Mokka, or get out of high cost manufacturing locations like Germany or shift more of the component manufacturing to cheaper to produce areas in Europe.
 

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GM's results are mostly hit by Russia, they were hugely exposed to the market and it pretty much collapsed and won't rebound for the coming years.

Most Eurozone markets (and EU markets for that matter) are rebounding and some growing quite rapidly, so this is not the problem. The problem is that GM needs to "buy" market share in the shrinking segments by undercutting rivals, especially for fleet sales (corporate fleets account for the majority of sales in the traditional classes, such as compact hatchbacks, midsize sedans and wagons), so even with the growth in sales, they are not recording much growth in profits.

Except for the Opel Adam and Mokka, however, GM has little to offer to capitalize on the growing segments. Moreover, the ADAM and Mokka still trail competition Europewide, as Opel has a really indistinct image - there is nothing exciting about owning one, not only vs. BMW or Audi, but even a Citroen. Margins are to be made in premium segments mostly, and GM is pretty much nonexistent there since they killed Saab and were never able to establish Cadillac.
 
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