Tuesday, October 16, 2007

General Motors Making A Comeback In Europe

General Motors Making A Comeback In Europe

For years, Detroit automaker General Motors has incurred billions in losses. This is true not only in the United States but also in the European auto circle. Businessweek reported that the European arm of the Detroit automaker has lost over $4 billion in six years starting in 2000. But while the company has seen its market share dwindle, the second quarter profit that the company posted recently is a sign that the automaker is moving in the right direction as directed by their turnaround plan.

The company posted a profitable second quarter even with its sales in the United States auto market continue to be lower than their sales output last year. This trend has been going on for the better part of the decade. But outside the United States, General Motors is showing resurgence. In Canada, auto sales for the company continue to increase. The automaker though received the biggest boost in terms of sales from General Motors Europe.

New models from its German marque Opel has been received favorably by European car buyers. The Opel Corsa is one of the German automakers’ more popular nameplates. Apart from the Corsa, European auto buyers have also shown great interest in the Opel Antara - the nameplate maybe familiar to Americans as the Antara is where the design of the redesigned Saturn Vue came from. The Opel Astra is also a popular car in the continent. A rebadged version of this will come to the United States this fall as the Saturn Astra.

Opel, being a German automaker, can be expected to release vehicles that will suit the taste of European auto buyers. This, of course, translates to higher sales for the automaker. But Opel is not the only General Motors marque to have shown better sales performance in Europe. The Businessweek reported that the marque posted an increase of 34 percent in sales for the second quarter of the year. These two marques are playing key roles in expanding the reach of General Motors outside of North America.

While the second quarter profit for General Motors is indeed good news for the company, the issue being raised now is whether General Motors can continue their good performance. Auto industry analysts are saying that the automaker needs to keep coming up with vehicles such as the Astra, Antara, and Corsa to complement the existing lineup. With the market share of the company dwindling in the United States, it can also offer more European cars in its home market.

Unfortunately for General Motors, the twinning project that they have done with Saturn and Opel only works one way, or so it seems. Saturn is benefiting from its partnership with Opel. The redesigned lineup of the American marque as well as the improved auto parts such as Saturn timing chain and other powertrain parts have made it one of the fastest growing brands in the United States.

The reason for this is that more and more American auto buyers are being attracted by the European styling on the new Saturn auto models. Opel, on the other hand, will not produce American designed cars in Europe. But Saturn is helping Opel in another way by sharing the cost of developing platforms. This platform sharing relationship of the two General Motors marque has lead to cutting down costs for both of them. Lowering the cost of developing new models is also a key in the profitable second quarter of the automaker.

In order to continue what they have apparently started, General Motors need to come up with a good plan concerning the diversity of their marques’ lineup.

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