Automotive News -- January 18, 2010 - 1:00 pm ET
FRANKFURT (Reuters) – The new CEO of Opel called on his staff to abandon any illusions that parent General Motors Co. was the root cause of the ailing German carmaker's problems and accept its own shortcomings.
"I am not of the opinion that we can make GM responsible for all of our problems,” Nick Reilly said in a letter to workers after appointing his new management team Friday. “That is only a poor excuse to avoid assuming responsibility for the difficult situation -- it's a victim mentality."
Opel's problems, including the lack of a product smaller than the Corsa subcompact, will likely be exacerbated by a decline in demand in 2010.
In the letter, Reilly forecast the western European car market would lose 1.5 million units this year, implying a total level of around 12.1 million vehicles.
Reilly, president of GM Europe, became Opel's CEO on Friday. He transferred to GM's European operations in December. Before that, he had served in GM's Asia-Pacific region since 2002, most recently as president of the automaker's international operations.
In a regulatory filing Friday, GM said it gave 650 million euros ($938 million) to Opel earlier this month, underlining the problems Reilly and his new team face.
GM said it advanced cash for engineering work it otherwise would have paid Opel in April and July.
"The payment accelerations serve as a temporary funding source for the (Opel) group's operations until more permanent financing can be arranged," GM said.
GM said it needs 3.3 billion euros to finance a restructuring for Opel and its U.K. sister brand Vauxhall.
European governments whose countries have Opel factories will pay close attention to the payment and Reilly's new management team, since they have to sign off on 2.7 billion euros in taxpayer aid for a restructuring that includes cutting more than 8,000 European jobs and possibly closing a plant in Antwerp.
Reilly, who is credited with rescuing GM's South Korean unit Daewoo, picked an old ally to join his new team along with a production boss and sales and marketing head who are both popular in their spheres.
Reilly picked Mark James as his finance director. The Briton joined GM in 1991 and, like Reilly, spent several years at its Vauxhall operations in Britain. He is currently CFO at Daewoo.
James will be responsible for creating a paper trail for European officials to track the use of taxpayer funds and ensuring Opel is meeting targets in its turnaround plan.
The group taking the helm at Opel also includes managers such as Reinald Hoben, a German who enjoys union support, as production boss and dealer favorite Alain Visser, a Belgian, to run marketing and sales.
Reilly's strong connections to GM Daewoo encumbered his start at Opel when he was initially appointed interim chief executive in November.
The South Korean carmaker he rescued from near collapse nearly a decade ago is viewed by some in Germany as growing in Europe at the expense of Opel.
Armed with an artificially weak won, Daewoo was able to earn higher margins in Opel's home markets by exporting cheap Chevrolets such as the Matiz. It also manufactures the Opel Antara SUV that has flopped, despite strong sales of the Chevrolet Captiva built on the same assembly line.
Troubled by veiled resentment towards him, Reilly addressed the issue head-on in his first conference call with the media as Opel CEO in early December, saying only about 1 percent of Opel sales were cannibalized by GM Daewoo's Chevrolet brand.
