Opel, the European arm of General Motors (GM.N), is reversing its upscale pricing strategy and will make its vehicles more affordable to win back buyers, CEO Karl-Friedrich Stracke said.
In addition the executive said the company will carry on investing in products.
“We will make a significant investment in Opel’s product portfolio,” Karl-Friedrich Stracke said at an automotive industry event on Thursday.
Stracke also said the General Motors Co. unit will not reduce investments in new products despite Europe’s debt crisis.
GM Europe’s supervisory board is scheduled to vote on Mr. Stracke’s eagerly-awaited turnaround plan on June 28. The plan is expected to include the possible closure of GM’s plant in Bochum, Germany, after 2016, which would mark the first closure of a major car plant in the country since World War II.
The departure of Opel would be another blow for Bochum, which lost a Nokia cellphone factory in 2008. The jobless rate is nearly 10 percent, well above the national average of 6.7 percent. The Opel plant, the city’s largest employer, has about 5,000 workers, including on-site subcontractors. In addition, about 40,000 jobs in the area depend on Opel, according to local officials.
GM’s plan to close another plant in Europe comes at a time when the auto industry in the region is squeezed by large overcapacity. GM closed its Belgian plant in Antwerp two years ago, but most mass-market rivals avoided large-scale cutbacks in Europe so far, partly due to political resistance.
“With 2012 industry volumes expected to be down 20% from demand in the past five years, waiting longer to act would be irresponsible,” Mr. Stracke added.