Opel’s CEO Outlines Plan to Return to Profitability

General Motors Company’s Opel/Vauxhall division is considering broadening its alliances beyond the one it currently has with France’s PSA/Peugeot-Citroen.  Among the alliances under consideration is one to build a Chevrolet model.

Speaking to workers at the company’s headquarters in Russelsheim, Germany today, Opel CEO Karl-Friedrich Stracke said the automaker is studying a number of options.

Stracke has outlined ten objectives aimed at returning the struggling Opel brand back to profitability.  They include expanding the automaker’s model lineup with new offerings like the Adam minicar and the Mokka small car, and broadening its reach into emerging markets including North Africa and South America, as well as more established markets like China, Russia and Australia.

Another of Stracke’s primary objectives is improving the company’s product quality and customer service. He also stressed the importance of lowering Opel’s material costs and streamlining its manufacturing processes to increase profit margins.

Stracke said, “Given the forecasted market volumes, it would not be viable to produce (the Astra) in more than two plants. If we run these two plants with three shifts, the production costs for the next Astra generation will be significantly below the costs of building the current Astra. Right now we’re operating three plants with just two shifts.”

Stracke did not indicate which of Opel’s factories will build the new Astra, but sources familiar with the matter have hinted that production will take place at GM’s facilities in Ellesmere Port in England and Gliwice in Poland. According to reports Opel’s ITEZ factory in Russelsheim, will be retooled to produce the Citroen C5 midsized model.  The plant currently produces Astras.

Stracke said that his strategy for returning Opel to profitability will be presented to Opel’s supervisory board next month.  “It is not a cost-cutting plan at all,” said Stracke. “It is much rather a comprehensive plan to quickly improve profitability, irrespective of if and how much the market is going to pick up steam. The plan will allow us to significantly increase our margins, market share and sales.”

During the first quarter, Opel/Vauxhall posted losses of $265 million as production volume fell by 16 percent to 227,590 units.

According to Stracke, the shakeup will not result in job losses at the ITEZ facilities. The plant currently employs approximately 6,500 workers. Instead, he said the company will honor its current labor contracts which are in effect through 2014. “The quicker we become profitable,” Stracke told workers, “the quicker we’ll share it with you.”

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