Karl-Friedrich Stracke has stepped down from his position as the head of General Motors (GM) in Europe, just two weeks after presenting a new plan to turn the struggling Opel and Vauxhall brands around.
GM has made it clear that it’s determined to return its loss-making European business to profitability, which includes the Opel and Vauxhall brands in the UK, despite tough competition among mass-market carmakers. GM’s European Opel and Vauxhall units have been a drag on the company’s earnings for over ten years, including a US$256 million loss in the first quarter of 2012 and US$700 million in 2011. Stockholders and analysts have questioned whether GM is moving fast enough to stem the losses and restructure its European operations, which have too many factories and workers.
During his role as head of GM’s embattled European divisions, Stracke developed a 10-point plan to set the company on the road to success. Areas of focus within the plan included: introducing new fuel-efficient engines and all-new models; streamlining production processes; expanding the company’s export program; securing new partnerships and deepening existing ones, in order to reduce research, development and production costs.
GM rode strong North American profits to earn US$1 billion last quarter, but its profit margin was 5.8 percent, well below the 10 percent margin typical of Hyundai or Volkswagen, the top industry performers. GM CEO Dan Akerson has said he wants to raise GM’s margins closer to the leaders.
The automaker is in the midst of a difficult effort to turn round its lossmaking Opel and Vauxhall businesses in Europe. A partnership with PSA Peugeot Citroen offers a chance for cutting costs, but will not show results for several years. Meanwhile, Opel is barred, for now, from closing plants in Germany to cut excess capacity.
Karl-Friedrich Stracke, 56, has been replaced by GM vice chairman Steve Girsky, currently chairman of the Opel supervisory board, who will serve as acting head of GM’s European operations while the company searches for a replacement. GM said is a statement that Stracke will stay with GM and take on special projects, reporting to CEO Dan Akerson, who paid tribute to the 56-year-old Stracke, saying he worked “tirelessly, under pressure, to stabilise this business.”
