GM Taps Former VW Exec to Turn Around Europe

RUESSELSHEIM, Germany – (WWJ) General Motors has turned to a long time Volkswagen veteran as it looks to turn around its money-losing European operations.

Karl-Thomas Neumann has been named chairman of Opel, and president of GM Europe. The appointment is effective March first.

"I am excited to lead a company with such a rich German heritage and strong product portfolio," said Neumann. "I'm aware that this will be a challenging job, but I'm convinced that together with my leadership team and employees, we will turn around the company."

General Motors lost $478 million in Europe in the third quarter, and is expected to post more losses when its fourth quarter numbers come out next month. While losses are expected to pile up next year, GM's goal is to hit break-even in Europe by mid-decade.

"Opel/Vauxhall is a key to General Motors' global success," said Dan Akerson, GM chairman and CEO. "This move will ensure that we have the best possible leadership in place as we continue driving toward profitability and growth in Europe."

Neumann, who's 51, has held a number of executive positions at Volkswagen and at supplier Continental AG. He ran Volkswagen's important China operations until August of 2012, and had been considered a rising star at Volkswagen, until, analysts say, he was pushed out in a management shuffle. GM says he has extensive turnaround experience.

"Neumann has in-depth knowledge of the automotive industry," said GM vice chair Steve Girsky, who is currently chairing Opel's Supervisory Board. "He has a proven track record in growing business in a profitable way as well as in turnarounds. He will add significant strength to the Management Board and will be instrumental in leading the company on a turnaround path that will be counted among Europe's most successful."

Opel's previous chairman, Karl-Freidrich Stracke, resigned last year.

Car and truck sales in Europe have been plummeting in recent years, with many analysts not expecting an improvement any time soon.

"It's a European capacity problem that we face in the auto industry," said Mike Robinet, managing director of IHS Automotive Consulting. "Until that's fixed, it's gonna be anybody's guess as to when profitability will return.",

General Motors, along with other major auto makers, has been working to win concessions from unions, and close plants. However, Robinet says it's not easy for carmakers in Europe, who need to deal with unions, government and other constituencies.

"None of which wants to reduce their capacity," he said. "Which, from a political perspective makes it very, very difficult to do business, and not really, in a wholesale way make any substantive changes."

Connect with Jeff Gilbert
Email: jdgilbert@cbs.com
Facebook: facebook.com/carchonicles
Twitter: @jefferygilbert