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Thursday, Jan 31, 2013 2:45 PM UTC

GM taps VW exec to run troubled Opel unit

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Topics: From the Wires,

FRANKFURT, Germany (AP) — General Motors has appointed the former head of Volkswagen’s China business to try and turn around its lossmaking European division, Opel.

The Adam Opel AG board of directors on Thursday named Karl-Thomas Neumann as CEO. Neumann, 51, also got the title of head of GM Europe and GM vice president.

Neumann formerly headed parts maker Continental AG and ran Volkswagen’s booming China business for two years until August, 2012.

He inherits a tough job from his predecessor, Karl-Friedrich Stracke, a veteran GM exec who resigned abruptly last year amid poor sales and earnings. GM has struggled for years to make money with its European business. Ruesselsheim-based Opel faces weak demand from a slow European economy and tough competition with other automakers for sales of smaller, mass-market cars that bring less profit than luxury models.

Part of the problem is that GM needs to reduce its European manufacturing capacity to cut costs. But union agreements have made it hard to close factories.

GM lost $478 million pretax in Europe in the third quarter, compared with a $292 million loss a year earlier. The company has predicted further European losses this year but expects to cut them by a third to a half this year and break even there by mid-decade.

Opel, which makes both Opel and Vauxhall cars, had been headed on an interim basis by strategy chief Thomas Sedran since the abrupt resignation of Stracke last year.

Steve Girsky, chairman of the Opel board, said that Neumann “has a proven track record in growing business in a profitable way as well as in turnarounds.”

GM CEO Dan Akerson said that the move “will ensure we have the best possible leadership in place as we continue driving toward profitability and growth in Europe.”

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