GM's Girsky sees 2012 profit in South America

Wed Apr 4, 2012 6:48pm EDT

* Girsky: new products to boost GM profit in South America

* GM alliance with Peugeot to be driven by new-product programs

* Girsky: alliance with Peugeot could be expanded

By Bernie Woodall

April 4 (Reuters) - General Motors Co will reverse 2011 losses in South America and turn a profit in the region this year, GM Vice Chairman Steve Girsky told an industry conference on Wednesday.

Girsky said GM will make money in South America partly because of a refreshed product portfolio that was allowed to become stodgy in recent years.

Three new products for South American markets have been introduced and six more are on the way this year.

"We're happy with the reception" of the new products, Girsky said. "We've got revenue opportunities and cost opportunities in Latin America and I would argue we're taking advantage of both of them. Latin America should be in the black this year."

Girsky made the comments at a Bank of America auto industry conference for investors in New York on Wednesday.

In the fourth quarter, GM lost $225 million in South America and for full-year 2011 lost $100 million after making a $800 million profit in 2010.

GM has not yet announced six of the new or refreshed products that will be launched later this year. The three that are already on sale are the Chevrolet Cobalt and Cruze sedans and the S-10 mid-sized pickup truck.

In Brazil, the largest auto market in South America, the Cobalt sedan, with sales of 15,627 in the first quarter, was first with 23 percent of the market for sedans of similar size. This version of the Cobalt was designed in Brazil for emerging markets and bares little resemblance to the U.S. vehicle of the same name.

The Cruze is second in Brazil among sedans its size and the S-10 is first among its peers such as the Toyota Motor Corp Hilux. In most of the world, GM sells the S-10 as the Chevrolet Colorado, which was launched last year.

NO DETAILS ON OPEL

Girsky also said that he believes the weak European auto market has bottomed out, but he declined to say when that region's economy will strengthen to the point that GM's European operations will make money.

GM has lost $12 billion in Europe in the last dozen years, and Girsky reiterated GM's stance that its European unit Opel was on its way to breaking even last year before the region's economy took a downturn in the second half of 2011.

Girsky did not offer timing for GM's European operations, which are dominated by Opel. Chevrolet has a small but growing presence in Europe, and Girsky said the company is considering merging some office functions of Opel and Chevrolet to cut costs.

Analysts at the industry conference failed to get the former Wall Street analyst to detail plant closure plans for Opel, which is in an alliance with France's PSA Peugeot Citroen .

Girsky said that there will be "no big bang" that will transform GM plans in Europe and with Peugeot, but rather incremental moves in the alliance.

Girsky said GM looks at the alliance mainly "in the context of Europe," while Peugeot considers the alliance and its global options. And there are global projects to share, he said.

"In fact, it's not clear whether the first product of this thing is actually going to be a Europe product or more of a global product. There's a timing issue there," said Girsky.

As he has said in the past, Girsky said that the alliance with Peugeot gives GM "another tool in the toolkit" to help it as it attempts to increase its market share in Europe.

"We are a 6-and-a-half percent-share company and we're competing with a 20 percent share-company, namely Volkswagen ," said Girsky.

"We view Peugeot as a fundamentally good car company with a bad footprint," he said.

Recently, Peugeot said its alliance with GM may expand to cover more vehicle categories and technologies, including a small car for the South American market.

Girsky said that GM will work with Peugeot as new products are launched and decide after a few of them whether to deepen or cut off ties.

Peugeot recently said it is considering broader cooperation with GM to cover more vehicle programs.

Girsky concurred.

"I think there's opportunities to expand this," he said. "Our plan was to start small and have the flexibility to add more things to it. If those work, you can add even more to it. There are plenty of cost opportunities to go deeper into this relationship, but we need to walk before we can run."

Girsky told the audience of auto industry analysts that he is often reminded of his days as an analyst when he wrote headlines for reports critical of GM. He was asked what kind of headline he would write about today's GM and how it stands.

"Good, and plenty to do," he said.

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