GM says Peugeot just one step in Opel fix

GENEVA (Reuters) – General Motors Co’s (NYS:GM) alliance with French peer PSA Peugeot Citroen (PAR:UG) is just one part of GM’s plan to fix its loss-making Opel unit, Vice Chairman Steve Girsky said, though he declined to say what would come next in the plan.

Girsky, a former Wall Street banker, told reporters at the Geneva Auto Show on Tuesday he knew investors, consumers and Opel workers did not like uncertainty but they just had to believe him when he said GM had a viable plan for Europe.

He said the alliance GM signed last week with Peugeot was “an additional tool to the toolkit in Europe.”

GM agreed to pay 304 million euros for a 7 percent stake in Peugeot, the French carmaker said on Tuesday, as part of an alliance designed to save the companies at least $2 billion over the next five years.

GM had previously valued the purchase at approximately 320 million euros based on earlier market prices.

“We can’t tell you what our play is in Europe,” said Girsky. “We will tell you when it plays out over the next period of months and years … I don’t see the play in Europe showing up in one big bang.”

Girsky declined to say when the next step would be made in the overall GM profit plan for Europe, where production capacity is estimated to be at least 20 percent higher than needed to keep companies profitable in a tight and weakening market.

“Excess capacity is not a GM issue, it’s an industry issue,” Girsky said.