2008 Geneva Motor Show: GM Europe Head Cautious on Market Outlook


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GENEVA Marh 4, 2008; Marcel Michelson writing for Reuters reported that the president of General Motors Europe believes the overall European market could show no growth at all this year but the picture varied greatly between countries, he said on Tuesday.

"Germany is recovering, Spain and Britain are down but Russia is booming," Carl-Peter Foster told reporters during a briefing at the motor show here, adding "we hope to sell more this year."

Foster said that Opel, the German brand of GM in Europe that sells as Vauxhall in Britain, had an operating margin of 2 percent in 2007 and GM wanted to boost that. But he said the low profitability was not a confined to Opel but was an industry-wide problem among volume car makers.

"The steel industry has consolidated too much," he said, blaming a sharp increase in steel prices for part of the industry's woes.

Regulation such as on environmental issues was also an obstacle to higher earnings. "The whole CO2 situation is not really profit enhancing," he said.

Foster declined to say what kind of margin he was aiming at for Opel, but he said earnings could be improved by increasing common parts for models, rationalizing production, focusing research spending and reducing purchasing cost. The Saab brand in Sweden could also help boosting earnings, and GM is considering whether to launch a small model for Saab.

Other makers such as PSA Peugeot Citroen or Renault have set themselves margin targets of 5.5 to 6 percent by 2010 or 6 percent by 2009 respectively.

"Those are nice intentions but they still need to be realized. I'd call it very brave to set targets like that," he said.

In Russia, sales are rising fast and GM is set to sell 300,000 to 400,000 vehicles there in 2008 -- a wide range.

Foster said Opel sales made up about a third of total GM sales in Russia -- which include Chevrolet -- and that proportion was higher than expected.

"Opel is perceived as a good German brand," he said and Russia could become a bigger market than Germany.

Asked whether this could lead to a reduction in Opel production and jobs in western Europe, he said this was not the case.

"We will always be exporting Opels to Russia," he said, while some large volume models might be made also in plants in Russia, Ukraine or Uzbekistan.

Asked to comment on the recent appointment of GM Finance Director Fritz Henderson to chief operating officer, Foster said this would free up time for chief executive Rick Wagoner to focus on such issues as emerging markets or alternative fuel.

"Rick has not taken holidays for three years," he said.

Editing for Reuters by Quentin Bryar

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