* GM sees product push driving Opel recovery
* Tie-up reports may reflect French government view -sources
* GM, Peugeot CEOs met Tuesday
By Ben Klayman and Laurence Frost
DETROIT, Jan 15 General Motors Co vowed
to stick with a gradual approach to Opel restructuring despite
mounting skepticism about its chances and signs of French
pressure for a more transformative tie-up with PSA Peugeot
A day after GM was forced to deny reports it was preparing
to offload its European division to Peugeot, the U.S. automaker
sought to change the subject by wheeling out more vehicles at
the Detroit auto show.
"Getting the story off the front page ... is incredibly
important," said Tim Lee, GM's international operations chief
and an Opel board member. "It's all about the cars."
Unlike U.S. rival Ford Motor Co, which is closing
three plants to halt European losses, GM says immediate
headline-grabbing closures aren't going to fix its problems in
the region. It has pledged to break even in Europe around 2015
and shutter a German factory two years later.
But doubts remain over whether the plans - that include 23
new models over five years - are enough to defend Opel's current
market share and reverse losses expected to reach at least $1.5
billion for 2012.
"The stable share is way too bullish," said Morgan Stanley
analyst Adam Jonas, who last year suggested GM sell Opel and
doesn't see the unit meeting its break-even goal.
"The revenue assumptions behind that don't allow for enough
further degradation" in the market or Opel's business, he added.
"Everyone's doing new product."
As GM presented its Cadillac ELR plug-in hybrid on Tuesday,
Chief Executive Dan Akerson met with his Peugeot counterpart
Philippe Varin in Detroit. Officials with both automakers
declined to give details of their conversation.
But both companies dismissed press speculation that a
Peugeot takeover of Opel was under discussion with the French
"Opel is not for sale," Akerson told reporters at the show
on Monday. "It's not to be given away either."
GM and Peugeot already plan joint development of three
vehicle families and small gasoline engines under agreements
outlined in December, 10 months into their alliance.
Persistent reports of deeper tie-up talks may reflect French
government enthusiasm for a combination seen offering Peugeot
some relief from its own darkening outlook, according to people
with knowledge of GM-Peugeot alliance discussions.
French Finance Minister Pierre Moscovici refused on Tuesday
to confirm or deny a newspaper report that talks were underway
on a deal that would see GM transfer Opel to Peugeot along with
several billion euros.
Detroit-based GM took a 7 percent Peugeot stake last year as
Europe's second-biggest automaker burned through about 200
million euros ($265 million) a month. GM is also struggling in
the depressed and highly competitive European market.
Mary Barra, GM global product development chief, defended
the company's Opel turnaround plans and European market
"We've got to be prepared for a length that no one knows,"
she said of the region's downturn. "We're taking that very much
The Opel recovery plan combines ambitious model rollouts
with a "series of incremental things" to cut costs over time,
subject to negotiations with Germany's IG Metall union, GM's Lee
Significant gains will come from new models like the Adam
minicar and Mokka SUV lifting revenue growth, he said. "We need
to get the product and business message above the din of labor
Some analysts believe the Opel strategy can deliver a 2015
break-even if handled right.
"If they're able to launch great product, take some risks
and leverage the PSA alliance, they should be able to get that
quality image up," said Citi's Itay Michaeli.
And according to a New York-based investment banker, who
asked not to be identified, pleasing GM shareholders may not be
as hard as all that.
"Expectations are so low, anything they do now is upside,"