GM's Euro Comeback Plan: Some Highlights


General Motors is briefing analysts later this morning about its plans to fix Europe, but there are some clues to what it plans to do on its investor relations website. The biggest steps involve its European plants. GM says it doesn't have a vehicle planned for its Bochum plant in Germany after 2016, "subject to consultation" (which basically means it has to talk to the German government and its labor union). GM also says it will reduce a third shift at the Eisenach factory in eastern Germany in 2013, and it says its transmission plant in Strasbourg, France, is "under review," something it announced back in May.

Beyond the plants, GM says its plans are to reduce fixed costs in Europe by $300 million in 2012, and another $500 million in 2013. Now remember, GM is expecting to lose as much as $1.5 billion in Europe in 2012, and slightly less in 2013, so there will be a significant shortfall it has to make up. How will that happen?

By mid-decade (that means 2015 or so), GM expects a "modest industry recovery." It says it is introducing 23 new models, and it plans to strengthen its brands (remember, GM also sells Chevys in Europe). It's going to expand auto financing, too. There are also savings it thinks it can get on parts costs, as well as the cost of distributing its vehicles across Europe. A big piece of its strategy is clearly its alliance with the PSA Group, and that's one of the biggest unknowns of GM in Europe. Peugeot has its own problems, but it did just get financial help from the French government.

Can the combination, plus GM's other steps, be enough to pull GM Europe out of the red and up to break even? As all this is going on, there will be an interesting comparison with what Ford is doing in Europe, as well as FIat's own plans for a turnaround there. It's one thing when you're off fixing things on your own. But when your competition is in the same boat, then it becomes something of a race. In this case, a Dan Akerson-Alan Mulally-Sergio Marchionne race. Who has the best plan? Who knows how to maneuver within the European community? We'll find that out.

Photo: The Associated Press

GM’s Euro Comeback Plan: Some Highlights