General Motors Co. (GM:US)’s Opel unit appointed Karl-Thomas Neumann as its top executive, tasking the former Volkswagen AG (VOW) manager with ending years of losses at the German subsidiary.
Neumann, 51, who was passed over in a management shuffle at VW last year after previously leading Chinese operations, will take the position on March 1, Ruesselsheim-based Opel said in a statement today. GM had been seeking to fill the post since ousting Karl-Friedrich Stracke in July. Neumann will also take the position of GM Europe president and become a member of GM’s Executive Committee.
“He has a proven track record in growing business in a profitable way as well as in turnarounds,” Stephen Girsky, head of Opel’s supervisory board, said in the statement. Girsky will step down as GM Europe president to make way for Neumann.
GM’s European operations have lost $17.3 billion since 1999. The company has forecast last year’s deficit at as much as $1.8 billion, eating into profits led by a rebound in the U.S. and contributions from Asia. Neumann will spearhead efforts to boost flagging sales and break even by 2015, including wringing concessions out of unions and closing a factory in Germany.
Deliveries of vehicles from Opel and its U.K. sister brand Vauxhall declined 16 percent to 834,790 vehicles in Europe last year, double the pace of the 7.8 percent industrywide slump. Car demand in the region is forecast to fall for a sixth straight year in 2013.
The former VW executive will takeover at Opel from Thomas Sedran, the unit’s strategy chief, who served as interim CEO following Stracke’s departure after about 15 months running the brand. Stracke himself was the replacement for Nick Reilly, who was appointed to the job after Detroit-based GM called off the planned sale of Opel in November 2009.
“Neumann needs to present a perspective and clear some of the disquiet caused by the many management changes,” said Marc- Rene Tonn, an analyst with Warburg Research in Hamburg. “He needs to establish some continuity and reliability. Neumann’s success also depends on what role the U.S. headquarters assigns to Opel in terms of development and production locations.”
Neumann, who has a doctorate in electrical engineering, was considered by analysts as a possible candidate to succeed Martin Winterkorn as CEO of Volkswagen before he fell from favor.
He started his professional career at Motorola Semiconductors and worked for VW from 1999 to 2004 before moving to Continental AG. (CON) He was appointed CEO of Europe’s second- largest auto-parts maker in August 2008 after Schaeffler AG pushed out Manfred Wennemer as part of a takeover battle. Neumann then clashed with Continental’s dominant shareholder, leading to his departure 13 months after taking the job.
Neumann returned to Volkswagen in December 2009 to oversee electric-car development. He was entrusted with oversight of VW’s Chinese operations in September 2010.
GM’s efforts to regain profitability involve a partnership with French carmaker PSA Peugeot Citroen (UG), Europe’s second- biggest carmaker, which also lost market share last year. The two companies have agreed to share development costs on compact cars and jointly purchase supplies in Europe.
Girsky is demanding contributions from Opel employees as a condition to extend an agreement to refrain from layoffs to the end of 2016. The division threatened earlier this month to close an assembly plant in Bochum, Germany, in January 2015, two years earlier than planned, unless workers there agree to lower pay.
The management and the IG Metall union have been negotiating over most of the last year. A wage increase, which was postponed for six months, was paid out finally after a deadline to find a solution by the end of October expired. Opel employees agreed to defer the wage gain again from November.
Opel is aiming to reduce headcount on a voluntary basis, including early retirement packages. The company targeted the elimination of 2,600 jobs across the region by the end of 2012 to reduce spending by $300 million. It intends to save another $500 million by 2015, according to restructuring plans announced in late October.
In addition to cutting costs, Opel plans to introduce 23 new vehicles by 2016, including the South Korea-built Mokka compact sport-utility vehicle, which went on sale in October, and the Cascada convertible, which will hit showrooms in April.
The new small car Adam, which is produced in Eisenach, Germany, went on sale this month and has received more than 20,000 orders.
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