Too soon to know whether Europe is stabilizing: GM CFO

Fri Sep 14, 2012 2:07pm EDT
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By Ben Klayman and Bernie Woodall

(Reuters) - It is not clear whether the weak European automotive market is stabilizing, but executives in the industry are talking more than ever about reducing capacity to match lower demand in the region, a top General Motors Co (GM.N: Quote) official said on Friday.

GM's Opel unit in Europe has lost $16 billion over the past 12 years and the U.S. automaker has pushed for change at the business. That has included the ouster of the unit's chief executive, as well as reducing the number of temporary and contract employees, and cutting the hours of workers at some plants.

However, the drop in industry sales brought on by the euro zone debt crisis has only put more pressure on GM.

"The issues in Europe are not just issues of the General Motors business in Europe," GM Chief Financial officer Dan Ammann said at a Morgan Stanley conference in New York. He added that it is a problem that plagues all of the European industry.

Ammann said it was too soon to know whether the European auto market has stabilized or might even get worse.

"Too soon to make a call," he said, adding it depended on the market or country.

The Morgan Stanley analyst hosting GM at the event, Adam Jonas, issued a research note last week in which he said it was time for GM to cut ties with Opel. GM has said it has no plans to do that.

Auto industry executives are talking more than ever about the need to reduce capacity in the region to match the lower demand, Ammann said. But he added that closing plants takes time as they are tied so closely to longer product life cycles.   Continued...

The logo of Opel is seen at a plant in Bochum August 23, 2012. REUTERS/Ina Fassbender