General Motors assured investors and analysts that its European business would break even by next year and make a profit in the future, as it set the stage for a return to the public markets.
Speaking at an investor day in the US, Mark James, the chief financial officer of Opel/Vauxhall, the troubled car company’s European marques, said that he expected the company finish its programme of 8,300 redundancies by the end of next year.
Meanwhile, Nick Reilly, GM’s Europe chief executive, said that the savings made from a leaner workforce, plus the introduction of new models, would help the business to break even by 2011. GM is negotiating with employees to make almost $333 million in cuts on wages, benefits and bonuses.
Today’s meeting was the first time that GM has come face-to-face with the financial community since emerging from bankruptcy in June last year, and was designed to set the scene ahead of a possible flotation toward the end of this year.
The company told the gathering that its international business was vital to GM’s recovery, with plans for 70 new or improved vehicles planned for outside the US by 2014.
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GM said that it was on track to become the first foreign maunfacturer to sell more than two million vehicles in China this year, making it the country’s top seller for the fifth year running.
The company also said that it was currently selling vehicles in the US for an average of $3,000 more than it was last year.
The US Government spent $50 billion propping up GM last year, taking a 61 per cent cut of the revived company in return. The Government is expected to sell part of this stake when the company does an initial public offering later this year.
The company today declined to comment on its flotation plans.
Opel/Vauxhall this month withdrew its request for €1.8 billion in state aid from Europe, including €330 million that it would have received from Britain. Mr Reilly said that GM would instead provide the E3.3 billion that the business needs in order to restructure. Britain’s Vauxhall plants will lose 500 jobs and 4,500 workers will have their pay frozen until the end of 2011.
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GM made a $856 million profit in the first quarter of the year, despite a $506 million loss in Europe, its only loss-making division.