Opel, the struggling European arm of General Motors Co , took a key step towards returning the brand to long-term profitability after its supervisory board voted in favor of a midterm business plan that included "massive" investments in its model range. The plan also envisages cost cuts, new models and efforts to win new export sales.
"The plan approved today paves the way for a strong future for Opel. GM stands behind Opel and supports management and labor," said GM Vice Chairman Stephen Girsky in a statement. The company has previously said it is working on plans that provide guaranteed jobs for German workers until 2016 in return for postponing pay increases, and the expectation that the plant in Bochum will close after that.
The company commented that it has plans to move into market segments where it has not been represented before, and expand sales in emerging markets. It also expects added savings from its alliance with France's Peugeot Citroen.
Opel’s underlying operating loss narrowed to $747 million last year from $1.95 billion in 2010. GM Chief Executive, Dan Akerson, said at an event in Chicago that it was premature to say how soon GM could turn its European operations back to profitability. However, he added that he would be disappointed if they could not get back to profitability within 5 years.
GM has not formulated any plans to restructure the money-losing European unit, but would provide more details once a definitive deal with the union workers is reached.
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