* Exec says Peugeot alliance is extra tool in Europe toolkit
* Declines to say what will come next in the plan
* Says working to improve profitability of European business
* Won't say how much GM expects to lose in Europe in 2012
* Says possible Europe mkt will be depressed for some years
By Bernie Woodall
GENEVA, March 6 General Motors Co's
alliance with French peer PSA Peugeot Citroen is just
one part of GM's plan to fix its loss-making Opel unit, Vice
Chairman Steve Girsky said, though he declined to say what would
come next in the plan.
Girsky, a former Wall Street banker, told reporters at the
Geneva Auto Shows on Tuesday he knew investors, consumers and
Opel workers do not like uncertainty but they just had to
believe him when he said GM has a viable plan for Europe.
He said the alliance GM signed last week with Peugeot is "an
additional tool to the toolkit in Europe".
GM paid 320 million euros ($423 million) for a 7 percent
stake in Peugeot as part of an alliance designed to save the
companies at least $2 billion over the next five years.
"We can't tell you what our play is in Europe," said Girksy.
"We will tell you when it plays out over the next period of
months and years ... I don't see the play in Europe showing up
in one big bang."
Girsky declined to say when the next step would be made in
the overall GM profit plan for Europe, where analysts and auto
executives say production capacity is at least 20 percent higher
than needed to keep companies profitable in a tight and
"Excess capacity is not a GM issue, it's an industry issue,"
"We've taken steps in the past. The only thing I can tell
you at this point in time is that we are working with all of our
constituents to improve the profitability of our European
business up and down the income statement. Improve the revenue
and improve the fixed-cost structure to improve the break-even
levels. We will tell you more when we know more."
He also declined to say how much the world's biggest
automaker will lose in Europe in 2012. GM's Detroit rival Ford
Motor Co said it will lose between $500 million and $600
million, due mainly to an 8.5 percent fall in industry European
auto sales this year.
Girsky would not comment on whether such a fall in sales
will mean GM would lose more money this year than the $747
million it lost in 2011. GM has lost money in Europe for the
last 12 years.
"It's not just investors who hate uncertainty," said Girsky.
"It's the workers, it's the employees. People are working really
hard on this. Please don't tell me we don't have a chance at
this. There's a lot of people - German, British, Spanish,
Polish, Russian and now French - working together to make this
"We know there's uncertainty. There's uncertainty in the
economic environment across Europe. That is what we have to live
with and what we have to work our way through. Working together,
we think we can get this done."
Girsky said GM is committed to Opel in Europe, including its
Vauxhall brand in Britain. "Any talk that we are not committed
to Europe should be off the table," he said.
GM last year named company veteran Karl Stracke as head of
its operations in Europe, added senior GM executives to the Opel
board and lowered bonus pay for GM executives in Europe.
"We're trying to change the calculus here," said Girsky. "We
know that running the same play the way we've been running it
won't work, and we're trying to do it differently. This (PSA
alliance) is an example of it and you are going to see more."
Girsky said GM and Opel have taken out as much capacity as
they can without closing plants. GM has an agreement with the
German union IG Metall not to cut jobs through 2014.
Michelle Krebs, analyst with Edmunds.com, said Girsky was
taking a risk that investors and consumers will trust GM has a
viable plan to fix Opel without offering specifics. Also, she
said, the alliance with Peugeot does not take out any of the
overcapacity that plagues most European automakers.
"Is this what the American taxpayer's want?" said Krebs, who
is at the Geneva Auto Show. "It's not solving their problem,
which is stemming the losses, and they are basically asking us
to trust that the payoff will come in the future."
Girsky, who is overseeing the reshaping of Opel, said the
first product on a shared platform would begin production in
2016, but the first concrete signs of efficiencies in the
alliance would emerge later this year.
"In the second half of this year, you will start to see some
of the product programs and the purchasing initiatives that we
do will start to be developed," Girsky said.
Girsky said the Peugeot-GM alliance will work for the
companies outside Europe as well, primarily in emerging markets.
He was not specific but agreed that Brazil and India could be
places where shared-platform vehicles may go on the market. He
said cars made for emerging markets will be different than those
In India, automakers often make less expensive vehicles with
Girsky said the new GM-Opel relationship is working to be
much more transparent to investors surrounding its costs. As
for closing plants, he said GM and Peugeot will make their own
decisions on how to manage their production, but restated that
the alliance will not cause any plants to close.
Girsky also said it was possible the European market will be
depressed for several years. Economic weakness is just one of
the reasons it will take GM longer to restructure toward
profitability in Europe than it did in North America, where it
was helped by governnment-sponsored bailout and bankruptcy.
"Bankruptcy created a big bang in the U.S.," said Girsky.
"In Europe, it will play out as the new product programs are