Opel CFO says GM sticking to brand for long haul

RUESSELSHEIM, Germany Fri Sep 7, 2012 12:04pm EDT

A clock shows five to twelve at the Opel plant of Bochum in March 28, 2012. REUTERS/Ina Fassbender

A clock shows five to twelve at the Opel plant of Bochum in March 28, 2012.

Credit: Reuters/Ina Fassbender

RUESSELSHEIM, Germany (Reuters) - General Motors (GM.N) has the stamina to turn around its troubled European unit Opel and has already mapped out where it wants to take the brand in the next ten years, new Opel finance chief Michael Lohscheller told Reuters in his first interview since assuming the post one week ago.

The 43-year old avid amateur athlete will have his work cut out for him, since GM's European operations have lost a total of $16 billion over the past dozen years despite repeated rounds of job cuts, the most recent one in 2010 that included the closure of Opel's Antwerp plant in Belgium.

"To run a marathon you need a reasonable basic speed, but you also have to sweat it out and ideally pick up the pace a bit towards the end. That has a lot in common with what we are doing here," said the former Volkswagen (VOWG_p.DE) finance manager, who has participated in 75 marathons since 1987, including runs in New York, Chicago and Berlin.

"We cannot just take off in a sprint and then be completely out of breath after three months, we need to be able to stick to our speed and maintain it - endurance is extremely important. Opel's recovery is a long term project."

Last November GM was forced to back down from its 2011 breakeven target for Opel, and the unit has gone on to amass another $700 million in losses in the first half of this year, prompting analysts to call for its disposal.

Lohscheller, who grew up near the German border with Holland and guarded the goalposts for 12 years for his local soccer team Borussia Bocholt, was poached by GM while still working for rival VW in the United States.

"I was convinced by the commitment that GM continues to show for Opel and Europe and I believe in the ten-year plan 'Drive Opel 2022', which is based on growth, through new products for example, and on cost reductions," he said.

"We're saving money in many parts of the business, but not when it comes to product investments or quality," added Lohscheller, pointing to launches of cars like the Mokka subcompact sport utility vehicle that will propel Opel into all new segments.

Swiftly following the small SUV in early October come both the new Adam lifestyle car angled at Mini and Fiat 500 buyers as well as the Cascada cabriolet, which debuts at the end of the first quarter next year.

Lohscheller declined to provide details of the ten-year plan beyond the announced roll-out of 23 models and 13 powertrains through the end of 2016, but the fact that Opel is preparing for another decade as a GM brand could disappoint those investors who are pushing Detroit to dump the brand once and for all.

On Thursday, Morgan Stanley's U.S. auto analyst Adam Jonas penned a report that concluded even a costly sale of Opel was preferable to either keeping or closing the unit, estimating that Opel will burn a further $12.3 billion of cash over the next ten years and tie up management resources.

JOINT PURCHASING

"GM signaled its clear support of Opel to me and has a great understanding for the situation in Europe," said Lohscheller, who by all accounts has taken a risk leaving a career at a successful carmaker to join the ailing GM unit.

"Opel is the pillar of GM in Europe. A global company can only be successful if it also has a strong presence in Europe."

Lohscheller played down a recent report in Der Spiegel that GM was damaging its strategic alliance with partner PSA (PEUP.PA) after allegedly deciding against providing the French carmaker with a platform for building mid-size Peugeots and Citroens.

He said that talks over sharing vehicle architectures for the mid-size segment were continuing, but the immediate focus was on completing the second leg of the partnership, which involves bundling their purchasing power together to save on material costs following July's logistics deal.

"We aim to reach an agreement by the end of this year," he said, referring to the talks over creating a joint procurement budget of some $125 billion annually between GM and PSA.

Lohscheller separately said that restructuring talks with its German union IG Metall were constructive and on track, although he refrained from promising they would be wrapped up by the end of October, since the result negotiated was just as important as the speed.

"We want to find a good solution to weatherproof Opel in Germany as well as in Europe. The faster we reach an agreement with our workforce the better," he said.

Lohscheller added that progress had already been made after a deal to reduce working hours in Ruesselsheim and Kaiserslautern starting this month.

"By choking production we can withdraw from less profitable business. We then take out the pressure to push volumes in the market and reduce our inventories, so costs drop," he said.

Nonetheless the long-time marathon runner made it clear that he wanted Opel to develop more of an "attacker's mentality" and pick up the pace of its turnaround efforts.

"We are going to step it up a bit," the new CFO promised.

(Editing by Jonathan Gould)