General Motors Co. (GM:US), the world’s second-biggest carmaker, plans to spend 230 million euros ($299 million) on a model-development center for its Opel and Vauxhall brands as part of its effort to restore profit in Europe.
Spending will be focused on adding testing facilities at its research center at Opel’s headquarters in the Frankfurt suburb of Ruesselsheim, and on its proving ground in Dudenhofen, Germany, the Detroit-based manufacturer said in a statement today. The budget is in addition to an investment plan of 4 billion euros through 2016 for new cars and engines announced earlier this month, said Ulrich Weber, an Opel spokesman.
GM’s European operations have accumulated $18 billion in losses since 1999, and the company has a target for the business to break even by 2015. In addition to a cost-reduction program that involves shutting a plant in Germany, GM’s European revival strategy includes introducing 23 models and 13 engines through 2016 to regain market share.
Combined new car registrations in March by Opel and Vauxhall dropped 10 percent in Europe, about equal to the regional market contraction. The European car industry is heading into its sixth straight year of sales declines, and deliveries may reach a 20-year low.
“The development done at Ruesselsheim will be on engines and transmissions for Europe and the rest of the world,” Opel Chief Executive Officer Karl-Thomas Neumann said in the statement. “This move will give us global responsibility in engine development.”
The management and the more than 6,000 employees at the Ruesselsheim development center also agreed to more flexible working conditions, Opel said.
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