General Motors in Europe: The Challenging Times



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Code : COM0102

Year :
2005

Industry : Automobiles

Region : Europe

Teaching Note: Not Available

Structured Assignment : Not Available

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The Challenging Times In the 1990s, the European automotive industry was represented by local automakers like Renault, Fiat, Peugeot and Volkswagen, American automakers like GM, Ford and Chrysler and Asian automakers like Nissan, Toyota and Honda. Operating in Europe required huge investments and to recover the high costs and earn profits, the manufacturers operated their plants to full capacities. After an 11-year prolonged economic boom from the late 1980s to 1990s, a recession set-in in 1999 leading to decrease in sales resulting in overproduction for the industry...

Growth of Asian Automakers in Europe While American automakers were entangled in troubles, the Asian automakers like Toyota, Honda, Nissan and Hyundai were gradually emerging as prominent players in the European markets. Carmakers from South Korea and Japan, led by Toyota, had been making steady inroads into the European market through investments in European production plants. The Asian automakers captured the markets with their smart cars that provided consumers with enhanced facilities like power steering, twin side airbags, anti-locking brakes and CD-players at prices far less than that of the other cars...

The Road Ahead for GME GME's Opel unit in Germany had been affected due to the country's strong unions, in flexible labour laws and high social insurance payments. Following the announcement of layoffs, the German employees of GME resorted to strikes. The political groups of Germany criticized GME for increasing the unemployment rates, which was already above 10%. To pacify the situations, GM offered $1 billion to persuade 10,000 German workers to quit the company voluntarily...

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