Another cash injection for Opel

GENERAL Motors has pledged a further 230 million Euros ($A290 million) to its loss-making European subsidiary Opel, with the investment to fund new testing facilities across two sites in Germany.

The significant cash injection – still subject to the approval of Opel’s Advisory Board – will be executed over the next “three to four years”, according to GM, and will help revamp Opel’s European Product Development Centre in Russelsheim and its proving ground in Dudenhofen.

News of GM’s investment comes two weeks after it announced it would spend an additional 4 billion Euro ($A5 billion) to shore up Opel between now and 2016, the majority of which will fund new models and powertrains.

GM’s European operations, led by Opel by also including its British sister brand Vauxhall, has accumulated losses of more than $A17 billion since 1999, including a loss of $1.8 billion last year alone.

The US auto giant calls its second major investment in Opel in as many weeks a “further step” in its efforts to strengthen the brand. Opel’s 10-year plan, called DRIVE 2022, predicts a return to profitability by 2015.

Furthermore, says GM, the investment will boost its global product development resources by enhancing Opel’s overall flexibility, speed and efficiency. Some of the money will be spent on purchasing common tools and equipment to drive economy of scale.

“Moreover, the investment is a key enabler for Opel/Vauxhall in the development of next-generation engines and compliance with European and global emission regulations. The investment also includes a new fuel station, audio lab and safety analysis building,” said GM.

New dynamometers for engines will replace older equipment to allow for development of new powertrains for 2020 and beyond. The modern lab will then be linked to GM’s US powertrain facilities in Pontiac and Torino.

As part of the investment, the proving grounds at Dudenhofen will also gain new capabilities, with a soak area, new workshop and vehicle dynos for important ultra-low emission testing – crucial for an increasingly stringent European market.

“This significant investment will last for decades and it will secure the future of the European Product Development Center,” said Opel CEO and president of GM Europe Karl-Thomas Neumann.

“The development done at Ruesselsheim will be on engines and transmissions for Europe and the rest of the world. This move will give us global responsibility in engine development”.

Meantime, Opel Australia recently confirmed to GoAuto that it was in it for the long haul after launching here last September, despite modest initial sales. The shift to markets such as Australia is part of a wider plan to diversify beyond its economically ravaged European hub.

The company launched with three model lines – the Corsa, Astra and Insignia – but is poised to double this with the introduction of the Zafira, Cascade convetible and Mokka small soft-roader. Earlier this year, it also added OPC performance versions of its original three models.