Carl-Peter Forster talks to Michael McAleer about the road ahead for Opel and Saab
The rapid growth in diesel may have had its day. That's the view of General Motors Europe president Carl-Peter Forster. "Petrol engines are fighting back," he says, "with engineers getting greater efficiency and lower emissions from petrol engines, along with advances in turbo technology for these engines."
For all the savings on fuel consumption at present, he says, "people will prefer the torque spread on offer from petrol engines as more fuel efficient petrol engines come on stream."
There's a cost factor to his calculations as well. If the tax advantages to diesel fuel is removed in the near future, he says, and the true cost of building diesel drivetrains is passed on to the public, then it could ultimately restrict diesel appeal to about 20 to 30 per cent of the overall market.
Forster has similar views about the limitations of hybrid technology. Although GM has recently agreed to work with DaimlerChrysler on developing hybrid models, he suggests that the true cost of hybrid development will hinder its growth.
"It's effectively two powertrains in one vehicle - an electric battery and motor system, and a petrol engine. So costs are significantly higher than the normal single powertrain versions."
Some car firms are prepared to take on the extra costs for now in order to develop the hybrid market, but he believes that in the long term it's difficult to see how this could be turned into a profitable operation.
This is refreshing honesty from someone whose company recently announced it was entering into a joint venture with DaimlerChrysler to develop hybrid technology. Plans are to have a saleable model ready by the end of the decade.
The comments are not simply crowd pleasers aimed to sweeten petrolhead hacks. His background in engineering and economics, along with 15 years at BMW, (during which he had overall responsibility for the 5-Series), suggests he has more than earned the right to his opinions on the future of cars and their market.
Yet costs and profitability are clearly at the forefront of Forster's mind, as he tries to turn GM's European operations into profit. The tall German knows he will be judged as much on the bottomline figures as any illustrious new models and technology.
Once the cash cow for the world's largest car firm, the European market has turned sour for GM. Opel, its main brand, has languished in the sales leagues, while Saab has failed to sparkle in the way fellow Swede Volvo has done for Ford.
It's been six months since Forster took the helm at GM Europe, and there's an air of determination in the way he addresses matters relating to the car giant's European operations. Then again, in one of the toughest jobs in the European car industry, he has little choice.
Suffering losses in every market and with enormous debts hanging over it due to pension and health care commitments in the US, shareholders and senior management are getting tired of losing hundreds of millions of euros. In Europe they've been dogged by a reputation for dullness and variable quality, and as a result have been losing money for years. Once GM could count on European profits to cover US losses, but now its European bits just add to the general misery.
Part of the plan to put the European operations back in the black has been a massive restructuring, including 12,000 redundancies and rapidly increasing co-operation between brands. The rebadging of Daewoo cars as Chevrolet is seen as the biggest restructuring success so far, albeit from a very limited market share.
Then there's the introduction of Cadillac as a more conservative premium brand, to sit alongside Saab, GM's current premium entrant.
However, the Swedish marque has more to worry about than sibling rivalry. GM's purchase of Saab five years ago has not been a shining success. The idea was that the marque would give GM entry to the more lucrative premium end of the European market. Instead it has created yet more losses.
The solution, it seems, is for Saab and the other GM European brands to share parts, engines and as much engineering as possible. In the hunt for economies of scale, however, there's no room for two plants in neighbouring countries doing similar things. So early this year Forster - and Detroit - made the ultimate call: the Swedish plant, in Trollhättan, will build Saabs until 2010, but the next generation of the Saab 9-3, will be built at Opel's plant in Rüsselsheim, Germany.
Forster also announced in May that the Swedish plant will lose production of a future Saab 9-5 replacement model.
He also suggested that the contract for a Saab crossover vehicle is unlikely to go to Sweden. Since it will be destined for the US market, local US production is more likely. Two Saabs for the US market only - the 9-2X (based on the Subaru Impreza) and the 9-7X SUV (based on the GM Trailblazer) - are already assembled outside Sweden.
So the current 300,000 production volume of the Swedish plant will far exceed any future plans. Forster has said he sees its future as being a niche-model production facility, with volumes of up to 50,000 per model, and a cumulative maximum of 100,000.
Some comfort may be taken from his comments that Saab needs its Swedish identity. The decision to create a special design centre for the brand in Trollhätten may reassure some doubters, but in the cut-throat environment in which GM finds itself globally, nothing can be assured.
AS to the future, GM plans to move Opel upmarket, making room for Chevrolet below. Opel will add two new models in the coming years: a two-seat roadster in Europe in 2006 and a high-end car to the top of its line-up but below models from Saab and Cadillac. The car will debut before 2010.
It's expected to be some form of crossover or "multiactivity vehicle". Opel's current top model, the Signum, has been doing badly on the forecourts.
The new flagship model will be based on the same platform as the next-generation Saab 9-3 and the next Opel Vectra. Both are planned for 2008-09. If the soon-to-be-released entry-level Cadillac BLS is successful, that car's replacement will also use this new architecture. The planned roadster will be a version of the rear-wheel-drive Saturn Sky.
Undoubtedly GM is feeling the pressure from competitors operating from a lower cost base out of eastern European plants in countries such as Slovakia and the Czech Republic. Yet Forster is relatively upbeat about western European car production.
"Having a production plant in a country is worth about an extra 1 or 2 per cent of market share," he says. "In a big market such as Germany, that represents significant sales. These are not the sort of reasons for opening a plant in western Europe these days, but they do serve as an argument for keeping one open."
So GM's future in car building in Europe seems secure more because of the cost of leaving, but then it's no different from the rest of the car industry in that regard.
However, as GM struggles with problems in the US and faces stiff competition in China, there are no longer any sacred cows. In the end all GM's European brands must prove their viability in the coming years. Otherwise, it will be Forster's job to wield the knife.