General Motors Europe's Fritz Henderson: "The market is stagnating, prices are dropping, and our production costs per unit are too high. We must change that"
He began his GM Europe stint on June 1.
Henderson, who also has headed GM's Asia-Pacific and Latin America-Africa-Middle East regions, spoke to Harald Hamprecht and Franz Rother of Automobilwoche, a German sister publication of Automotive News.
You have traveled a lot during the past few weeks to look at plants and sales subsidiaries. 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 in the market.
The dealers are faced with a big challenge as the European market is very weak.
How would you describe GM Europe's current state?
Totally unacceptable. That's how I would describe it.
We lost a lot of money during the first half, and that is very annoying.
GM Europe 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.
Do you want to make a significant profit in 2005?
Want to? We have to. The group is expecting it.
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 expect to introduce a rescue plan soon. Can you disclose any details?
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 plan to reduce capacity 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 is GM Europe's overcapacity?
We have very high overcapacity. However, I will not state any figures.
Despite your overcapacity, Magna Steyr is manufacturing the Saab 9-3 convertible for you, and Heuliez is building the Tigra TwinTop for GM. Are there 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.
Do you think you need a low-cost car such as the Dacia Logan?
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's without diesel engines. It is a good starting point.
What will GM Europe's market share be by year end?
We are not making any forecasts in that respect. A lot of things were announced in the past 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.
In Detroit you are being talked about as the successor for GM CEO Rick Wagoner. How long will you stay 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.