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GM Europe’s Reilly Wants More Constructive E.U. Policy

Opel-Vauxhall Now On The Right Track
Warns China Might Take The Inside Track In Electric Vehicles

BILBAO, Spain – GM Europe President Nick Reilly called for the European Union to take manufacturing industry more seriously, take steps to improve the single market, and make sure regulation helped rather than hindered auto companies, while he believed Opel-Vauxhall was on the right track towards a viable future.

GM Europe declared a couple of weeks ago that its parent company General Motors Co would fund the 3.3 billion euro ($4 billion) restructuring programme, after Germany refused to take up its 1.1 billion euro share of the plan.

“Opel-Vauxhall has made progress on every front in the last few months and is on a good way towards returning to a viable business with solid results in the not too distant future,” said Reilly, addressing the Automotive News Europe congress.

“We are embarking on a far-reaching investment and product offensive, but we are also right-sizing our company, adjusting capacities to changed global market conditions, a challenge the entire industry is facing after the dramatic impact of the unfavourable economic climate,” Reilly said.

Reilly said Opel-Vauxhall’s capacity use had been considerably improved and the breakeven point reduced, although he didn’t give any more detail.

Big mistake
Europe had made the big mistake of neglecting the manufacturing sector.

“I firmly believe that it is vital for our Western economies to maintain a manufacturing base and therefore a mixed economy. Economies make a huge mistake if they believe they can sustain themselves based on a service industry only. This has been drilled home to us during the current economic crisis.  Some countries have understood that very well, others – like the UK – not so well, and manufacturing has been seriously weakened. There needs to be a well-defined purposeful strategy involving industries, academia and governments, towards a mixed and balanced economy,” Reilly said.

Reilly called for governments to create the which would lead to more jobs.

“We need a deliberate policy to generate jobs in Europe. This is particularly true since there is a massive shift of economic power to the East, and Europe must not be complacent. This means that we need to accept that more flexibility and hard work is required. The EU single market must be nurtured: more harmonisation of “green” taxation and incentives would help tremendously. We simply cannot afford to have our vehicles developed and built according to multiple technical specifications and requirements in different member states,” Reilly said.

Reilly warned that the race to provide electric vehicles might be won by China if western companies didn’t take the threat seriously.

“The speed in which Asia is moving up on battery and other technology is amazing. China invests billions in the development of electric cars, battery technology and other alternative energy, leading to significant technology advancements and a rapid decrease in unit costs.”

“Most international studies project the eventual disappearance of combustion engines and their replacement by electric motors. Other forecasts expect the electric car to be a mass product in no more than 10 years’ time. We must not miss that boat and allow Asian manufacturers to enjoy our market opportunities.”

Vauxhall stays
Reilly was asked after his speech if GM Europe would retain its Vauxhall brand.

“We’ve been there a long time, we have a brand that’s trusted, we have no intention of getting rid of it.”
In Germany, where Opel’s reputation has suffered from the uncertainty surround the restructuring bailout, the company will have to work on rebuilding its public image.

“Yes, we do need to recover the image in Germany.”

Opel would also need to work on winning back its reputation for reliability.

“We did have a reputation some years ago for reliability. I would admit that we have lost a bit of that reputation, but it’s still there in the back of people’s minds, and so we’re going to bring it forward again.”

Neil Winton – July 1, 2010

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