It plans to introduce 23 models of the German car by 2016
GM backs Opel as new chief pledges turnaround Mr Girsky: Is taking direct responsibility for making his decision against the sale of the Opel unit work

[FRANKFURT] For General Motors Co (GM) vice-chairman Steve Girsky, it's sink-or-swim time.

As a GM director, the former president of Centerbridge Industrial Partners LLC opposed the sale of the Opel unit in 2009.

After being appointed to head GM's European operations in July, the Wall Street veteran is taking direct responsibility for making that decision work, and he's committed to fixing the German carmaker.

"We're going to support this company and this brand, and we're going to give Opel tools to help them be successful," Mr Girsky said in his first interview since taking the post. "You can't have a mindset that it's OK to lose a billion a year. That's the mindset we're trying to change."

The appointment as interim European chief puts Mr Girsky at the centre of the Detroit carmaker's efforts to make its Opel unit profitable after GM racked up US$16.8 billion in losses in the region since 1999.

With European auto deliveries poised to drop this year to the lowest level since 1995, Opel's persistent losses have cast a shadow over GM's emergence from bankruptcy.

"His future in General Motors depends on a successful reorganisation of Opel," said Stefan Bratzel, director of the Center of Automotive Management in Bergisch Gladbach, Germany. "He can't pull himself out of it."

GM, restructured in a 2009 bankruptcy backed by US$50 billion in US funding, has shown little progress in stabilising Opel.

European losses before interest and taxes totalled US$617 million in the first half, after a profit of US$107 million a year earlier. GM also wrote down US$590 million of goodwill in Europe in the first half.

Opel and its UK sister brand Vauxhall have suffered more than other manufacturers from the debt crisis.

Deliveries in Western Europe dropped 15 per cent in the first half, more than double the 6.9 per cent industrywide decline. Its market share shrank to 6.9 per cent in the period from 12.6 per cent in 1993.

To reverse the slide, GM plans to expand Opel's line-up by introducing 23 models by 2016, including the Mokka compact crossover in October. The Adam mini car will be rolled out in 2013, followed by the four-seater Cascada convertible.

"Opel needs new innovative models to grow again and not compete just on price," said Tim Schuldt, an analyst with Equinet in Frankfurt. "With shrinking volumes, Opel has lost its competitiveness, especially compared to rivals such as VW."

Benefiting from its ability to share technology with brands including Audi and Skoda, Volkswagen AG increased market share in Western Europe to 23.7 per cent in the first half from 22.4 per cent a year ago.

The company last week introduced a new version of the Golf hatchback, which competes with Opel's Astra.

VW generated an operating profit margin of 6.8 per cent of sales in the second quarter, compared with 4.8 per cent at GM, according to data compiled by Bloomberg.

The Wolfsburg, Germany-based company's stock has jumped 23 per cent this year, while GM has climbed 15 per cent.

Mr Girsky, 50, who drives an Opel-made Buick Regal in Detroit, jumped in after GM ousted Karl-Friedrich Stracke, Opel's chief executive officer, who had served as GM Europe president for less than seven months.

Mr Girsky now spends about three weeks a month in Germany as he searches for a permanent replacement to run Opel and GM's European operations and works on stemming Opel's losses.

The executive, who was appointed vice-chairman in March 2010 and oversees GM's global strategy and business development, acknowledges that the carmaker hasn't completely figured out the formula to fix Opel even after years of restructuring efforts, which included the 2010 closure of a factory in Antwerp, Belgium.