GM's Opel: Market Share To Slip Despite Higher Vectra Demand

RUESSELSHEIM, Germany -Sept 3, Dow Jones reported that Adam Opel AG , the German carmaking arm of General Motors Corp. , Tuesday confirmed plans to speed up production for several cars, especially the key Vectra model, though German market share will likely slip this year.

Management board member Carl-Peter Forster told reporters that market share in home-market Germany, the biggest auto market in Europe, is set to slip below 2001's 11.8%. It should remain above 10%, however, Forster said on the sidelines of a product presentation.

Forster said auto markets remain shaky as the economic situation is muted, burdened by bad news from equity markets and political uncertainty. But the company hopes that efforts to improve quality and build autos that meet trends will help offset falling car sales.

One crucial model is the Vectra, which was launched in April. As of Aug. 31, the auto company racked up 70,000 in orders for the mid-sized car, Forster said.

It now expects to build 165,000 cars this year, up from earlier plans for just 150,000. To do that, Opel's main Ruesselsheim plant will work for six extra shifts on Saturdays this year, Forster said. Vectra output now is around 700 cars a day, up from about 650 in June.

In fact, the Vectra hatchback outsold rivals Ford Motor Co.'s Mondeo hatchback and Volkswagen AG's Passat in the first seven months of the year, an Opel spokesman said. Vectra registrations in Germany in that time were 17,476 compared with the Passat's 14,169 and Mondeo's 11,955.

Opel's Bochum, Germany, plant is also slated to run for 18 extra shifts, Forster added. That will boost production of minivan Zafira.

A sporty version of the Vectra to debut in September, the GTS, should help boost sales, too, Forster said.

Forster also unveiled plans to start building compact minivan Meriva and the Signum, a bigger and more elegant version of the Vectra, next spring. These should help meet growing demand for more individual cars, rather than run-of- the-mill, large-scale production cars.

Signum production should later reach around 85,000 a year, or 21% of capacity for the overall Vectra line, Forster said.

Opel is developing several new diesel engines in a bid to increase its share of sales of diesel-powered cars above 29.9%, where it stands now. That's much less than average in Europe, where diesel has been a major trend in the last few years.

The struggling carmakers' turnaround plan, dubbed Olympia, entails cutting capacity and headcount while revamping its model lineup to perk up sales. That formula is meant to help Opel significantly reduce its operating loss this year and earn a profit by the fourth quarter of 2003.

Forster declined to confirm or deny recent reports that Opel expects to lose around EUR400 million this year, compared with a loss of EUR674 million in 2001.

Cost-cutting measures are paying off, Forster added. Material costs are down about 10% from 2001, he said. At the same time, improving quality is helping trim warranty costs, which are about 27% lower than in 1998.