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Barra: GM sticking to product plans to revive Opel profits

CEO 'pleased with progress so far'

Barra: "It is no accident that I chose to come to Germany." Photo credit: BLOOMBERG

RUESSELSHEIM, Germany -- General Motors' new CEO, Mary Barra, on Monday said the company's unprofitable European unit, Opel, was a vital part of the automaker.

"It is no accident that I chose to come to Germany. I thought it was very important to reinforce my commitment to Opel, Opel is clearly a vital part of our company," said Barra, who took the top job earlier this month.

In April 2013, GM said it would invest 4 billion euros ($5.5 billion) through 2016 to fund 23 new models and 13 new engines to overhaul Opel's aging product range.

GM is sticking to plans for its Opel unit to build an all-new vehicle at the brand's main plant in Germany as part of an effort to restore earnings in Europe, Barra said.

GM's European division, which also includes the Vauxhall marque in the U.K., targets a return to profit by mid-decade.

GM has lost more than $18 billion in the region since 1999. The U.S. carmaker is forecasting that group profit will increase "modestly" in 2014 because of spending to fix troubled European and Asian units.

Barra, the first female CEO of a global automaker, is making her first trip outside the United States since succeeding Dan Akerson as head of GM on Jan. 15.

Her schedule in Europe includes visits to the carmaker's engineering and production facilities in Ruesselsheim. Barra was head of product development under Akerson, who led the automaker out of government ownership that followed the company's 2009 bankruptcy reorganization.

Chevrolet pullout

GM decided in December to pull Chevrolet out of Europe, reversing a decade-old sales effort to promote the U.S. nameplate in the region, to give Opel more scope to expand.

Opel will shut its car plant in Bochum, Germany, by the end of this year, the first automotive assembly plant to close in the country since World War II.

Opel said on Dec. 12 that the Ruesselsheim plant, which makes the Insignia mid-sized car and is scheduled to start building the Zafira Tourer van in 2015, will be assigned a new model whose details will be disclosed later.

Production of the new vehicle will "go hand-in-hand" with additional spending in Germany, Barra said, adding that she's "very pleased with Opel's progress so far."

European sales by Opel and Vauxhall last year fell 1.5 percent to 825,000 vehicles, according to Brussels-based auto industry group ACEA. Their market share remained steady at 6.7 percent, making them together the third-biggest automotive marque in Europe, after the namesake brand of Volkswagen AG and Ford Motor Co.

Opel chairman

GM President Dan Ammann, who will be responsible for global regions under Barra, is being nominated to supervisory board chairman at Opel, succeeding GM Vice Chairman Steve Girsky in the German post, the company said today.

GM and Paris-based PSA Peugeot Citroen, Europe's second-biggest carmaker, are cooperating on procuring parts and developing vehicles in an effort to reduce costs. Projects include joint production in France and at Opel's assembly plant in Zaragoza, Spain.

GM disposed of its 7 percent stake in Peugeot late last year, 21 months after making the investment, as cost savings fell short of expectations and the struggling French carmaker started to seek aid from a Chinese partner.

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