Reilly Sends Opel On Mission Impossible
Nick Reilly, head of Opel, or rather General Motors Europe, which supposedly doesn’t exist anymore, wants to be Superman.
In an interview with the Financial Times, Reilly said that Opel should shoot for an operating profit margin of 4-5 percent within four years, if not earlier.
In the world according to Reilly, Opel will perform like this: Opel will face “another tough” year in 2010, when Europe goes on C4C withdrawal. Reilly sees Opel to break even by 2011 and make a “decent” profit from 2012.
Says Reilly: “If we are successful we should be at least 4-5 percent. Four to five per cent gives a good return on investment and capital … It shouldn’t take more than four years.”
Industry insiders think Reilly is hallucinating.
In the car business, 4-5 percent margin on revenue is considered a miracle. Arndt Ellinghorst, head of automotive research at Credit Suisse, said: “In the best case, when the product cycle is peaking and car demand is booming, a mass market carmaker can reach a profit margin of 4-5 per cent.”
To make matters worse, Reilly said that Opel’s focus should be saturated Europe. Later, maybe, he sees Opel to expand to South America, the Middle East or other parts of Asia. Without immediate access to the growth markets, Opel is doomed.
Reilly plans to present a €3.3b ($4.7b) restructuring plan by mid-January. If those targets are part of the plan, then all that’s left for Opel is to pray.Reilly Sends Opel On Mission Impossible
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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