GM 'optimistic' about Europe as Chevy sales shifted

Bloomberg News (Dubai) - General Motors Co. (GM), the biggest U.S. automaker, is "optimistic" about Europe as the manufacturer shifts marketing of the Chevrolet brand in the region to its Asian and Middle Eastern unit.

The General Motors International Operations unit, which already sells GM's brands including Chevrolet outside the Americas and central and western Europe, will take on the new market as of Jan. 1, Tim Lee, president of the division, said in an interview in Dubai.

GM's global third-quarter profit fell 2.5 percent and the Detroit-based carmaker abandoned a goal yesterday of breaking even this year in Europe, where it makes Opel and Vauxhall models, as economic conditions in the region deteriorate. Lee's GMIO unit was the automaker's only business outside North America to report a profit in the quarter, in contrast to losses at GM Europe and in South America.

"I am very optimistic that between the divisions -- Chevrolet, Opel and Vauxhall -- we can find good synergies and improve our business conditions," Lee said.

GM expects a "very strong" end to the year in GMIO's markets, Lee said. The unit is also responsible for GM's business in Africa and former Soviet countries including Russia.

Floods in Thailand, currently in the 15th week, won't have any material impact on GM's operations in the country in the fourth quarter, Lee said. The company has relocated its national headquarters from Bangkok to its plant in the city of Rayong, where production is continuing, he said.

Development Costs

GM's worldwide profit this year has been affected by increasing costs related to engineering, marketing and introducing models, Lee said.

The spending has "brought us down a bit, but these are investments we're making in the future," said Lee, who is presenting Chevrolet's new TrailBlazer sport-utility vehicle at the Dubai International Motor Show.

The U.S. carmaker had aimed to break even this year in Europe in terms of earnings before interest and taxes, excluding reorganization costs. GM Europe's losses during the quarter narrowed to $292 million from $559 million a year earlier, while the unit's deliveries rose 4.6 percent to 407,000 vehicles. The results in Europe and South America were "unacceptable," Chief Executive Officer Dan Akerson said yesterday.

"Europe is a concern," Lee said. "We have yet to solve the riddle in terms of being steadily profitable in Europe, but we are working on it every day both from the Opel, the Vauxhall and the Chevrolet side."