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Gm's Mr. Fixit Really Has His Hands Full (Int'l Edition)


International -- European Business: Germany

GM's Mr. Fixit Really Has His Hands Full (int'l edition)

Can CEO Hendry repair Opel's sputtering engine?

It has been one bad move after another at German auto maker Adam Opel, whose market share has been tumbling. Last October, General Motors Corp., Opel's parent, abruptly summoned Opel's popular new head, Gary Cowger, back to a job in Detroit after just four months in Germany. GM tried to replace him with a German--but backed off when workers nearly mutinied when they heard of the proposed choice. Worse, Detroit did all this without consulting Opel's supervisory board, a must in German business circles.

This sorry background makes the latest move by Robert W. Hendry, Opel's chief since November, all the more surprising. On Feb. 18, Hendry put himself on the line by revealing ambitious goals for Opel: to regain one point of German market share this year, rising from 14.3% now, to 17% by 2003. Hendry isn't just aiming for recovery. He wants a smashing victory in one of the most competitive car markets anywhere.

Repairing Opel, which last year accounted for two-thirds of GM's 1.6 million car sales in Europe, may be the toughest job yet for GM's Mr. Fixit. Hendry, 54, a soft-spoken, affable Michigan native, was retooling Saab when he got the order last October from GM CEO Jack Smith to head for Germany.

He's up against management bickering, an aging model lineup, and a bad market position. Faced with popular new models from Volkswagen and Renault, Opel saw its Western European market share slip from 13% in 1995, to 11.3% last year. "It's going to be tough to regain the momentum," warns Nick Snee, an auto analyst at J.P. Morgan Securities Ltd. in London.

Hendry knows he must move fast, but he has taken time to figure out what he's getting into. For three months, he has interviewed managers, workers, dealers, customers, and even auto journalists to get a handle on how Opel lost its way. The answer he got was pretty simple: Customers really didn't know what the Opel name represented any more. And since they had plenty of other options in the marketplace, they didn't bother to find out. "We need a clear strategy to manage the brand," says Hendry.

Insiders hope Hendry can bring back the pizzazz of the early '90s, when Opel was Europe's market leader. Although the Astra compact, launched late in 1997 and starting at $14,700, accounts for a third of sales, it's "worthy but dull," says Snee. Opel has failed to jump into niche markets, and it has neglected the top of the market, where margins are fatter. Hendry has promised to decide by August how Opel should attack that segment.

The company shows signs of picking up the pace. In April, it will launch the Zafira, a compact minivan starting at $20,600, to tackle the market dominated by Renault's wildly successful Megane Scenic. As for fun cars, Hendry says he wants to offer coupe and convertible versions of the Astra and promises more models, including a mini car, to grab younger drivers.DELICATE JOBS. Hendry may also need to talk tough to Detroit. There's smoldering resentment around Opel over GM using the company as the base for operations from Brazil to Thailand. Many executives feel the global role stretches resources too thin when the huge European market should be the focus. So they hope Hendry can get Detroit to ease up. "He is very tough," says Rudolf Muller, head of the works council and a member of the supervisory board. "He will fight for a strong Opel."

The son of a Detroit shop steward, Hendry made a name for himself in GM as one of the few who would speak his mind to Jack Smith. That and a talent for meeting his management targets have landed him a series of delicate jobs from California to Sweden (table). "When the bottom line is not up to snuff, my phone rings," says Hendry. Adds Smith: "I need him. He doesn't need me."

Hendry doesn't consider himself a car guy, even though he rebuilt his own first car, an old Alfa Romeo, and likes to race MGs. He studied finance and marketing, which is unusual in Germany, where auto CEOs are usually engineers. By focusing on Saab's two core models and shooting down big investment plans, his pragmatic approach turned Saab around. He will need those talents and more to get Opel back in the race.By Karen Lowry Miller in Russelsheim, with Kathleen Kerwin in DetroitReturn to top


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