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"We have to continue being aggressive," says GM Europe boss

Zurich. GM Europe chairman Fritz Henderson plans to return European operations of the world's largest automaker to profit in 2005. He told Automobilwoche how.

Mr. Henderson, you have traveled a lot during the past few weeks to look at plants and trading enterprises. What impressions have you gained?

I always go on trips like that when I start a new job. That way I can see what is happening on the market. The dealers are faced with a big challenge as the European market is very weak.

What is GM Europe's current state? How would you describe it?

Totally unacceptable. That's how I would describe it. We lost a lot of money during the first half and that is very annoying.

GME wanted to achieve at least breakeven this year. Is this still feasible?

I will not make any forecasts regarding profitability during the second half. We talked about the results of the second quarter but we can only discuss the details after October 14 once the Group has announced the figures for the third quarter.

You want to make a significant profit in 2005.

Want to? We have to. The group is expecting it.

And how are you going to manage that?

We have a lot of new products and more will follow next year. The problem is that competition in Europe is much tougher today than it was three years ago. The market is stagnating, prices are dropping and our production costs per unit are too high. We must change that.

You are planning to introduce a rescue scheme soon. Can you disclose any details yet?

No, I cannot. First we have to finalize our negotiations with the works council. All I can say is that we will need to make changes very quickly. Otherwise we will not be able to make a positive impact on the 2005 results.

There are rumors that you are planning to reduce capacities in Europe by 150,000 units and to cut thousands of jobs.

I also saw those figures in the papers. But I never mentioned those figures. The fact of the matter is that we have not finished our rescue plan yet and it is not sure yet if we actually need to reduce capacity or just costs. Therefore there is still a lot of room for speculation.

How large are GM Europe's overcapacity currently?

We have very high overcapacity. However, I will not state any figures.

Magna Steyr is manufacturing the Saab 9-3 convertible for you and Heuliez the Tigra TwinTop, despite your overcapacity. Are there any plans to take that production in-house?

No. We had good reasons to cooperate with the suppliers. Both corporations have made investments in their production lines as a result. And we have contracts we cannot cancel just like that.

You also have overcapacity at your transmission and engine plants. What will happen to those?

We have overcapacity specifically within the production of gasoline engines because the demand for diesel engines is rising in Europe. We have taken several measures during the past three years to reduce overcapacity. However, they were not sufficient. We have to continue being aggressive.

Let's talk about the market. Are you expecting a strong finish from manufacturers by the end of this year?

There is always a possibility this could happen. However, so far I cannot see any signs that this will be the case. The current situation is that despite falling prices the demand is not increasing. This is unusual. It probably is linked to the fact that consumers still have little faith in the future.

Don't you think you would need a low-cost car such as the Dacia Logan in this situation?

That is why we have Chevrolet.

You are seriously comparing Chevrolet with Dacia?

According to our strategy for Europe Chevrolet will be a bottom-of-the-range brand. I have a good feeling regarding this market position. We will achieve a market share of almost 1 percent in Europe this year, and that without diesel engines. It is a good starting point.

What will be GM Europe's market share by year-end?

We are not making any forecasts in that respect. A lot of things were announced in the past and but not realized. My motto is to first do something and then talk about it.

Are you satisfied with your current 9.6 percent share?

We are certainly not satisfied with 9.6 percent. We can do better than that.

Are you happy at least with the unit sales of the new Astra?

Definitely. We expected unit sales of 185,000 cars in 2004 for the whole Astra series, both the old and the new model and the Caravan. So far we sold 230,000 vehicles, which means a unit sales increase of 12 percent. If we add the GTC to this we might even achieve 20 percent growth in 2005.

Has a decision been made regarding the Insignia?

No. When looking at the project's different aspects and at our list of priorities, then I am not sure if we should invest our money in a car such as the Insignia.

The Speedster will run out by the end of the year. Will there be a successor?

So far there are no plans for a Speedster successor.

In Detroit you are being talked about as the successor for GM CEO Rick Wagoner. For how long will you be staying in Zurich?

(laughs) I like being here. I enjoy the work a lot. The turnaround for GME is an exciting project. Only Rick Wagoner can answer your question.

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