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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Introduction:General Motors Europe (GME), the European division of the world's largest automobile manufacturer General Motors (GM), operates in more than 30 European markets with production and assembly facilities in eight European countries. GM is one of the "Big Three" Detroit automakers that ventured into the European markets to expand their operations globally. The company strengthened its presence in the European markets with brands like Opel, Vauxhall, Saab, Cadillac,Chevrolet and Daewoo reflecting its strategic coordination and business expertise.

In the early 1990s, GME was the second largest carmaker in Europe, with 13% share of the market, next only to Volkswagen, the market leader. But since 1999, the company has been reporting protracted losses and declining market share due to weak consumer demand, growing competition from European and Asian brands and a negative attitude towards vehicle prices resulting in excess production capacity, high labour costs and a loss of $3 billion. The company had gradually slipped from second position to fifth position in the European market by 2004. The company's new Chairman, Frederick Henderson formulated restructuring plans to improve the market position and return to profits, which involved laying off 20% of its total workforce, reduction of production capacity, decrease in structural costs by $600 million, integration of the engineering activities, restructuring of functional lines and creation of a single design unit for its models.

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