GM moves production of Opel Mokka to Spain

 

General Motors is moving a large chunk of production of the new Mokka subcompact sport-utility vehicle from South Korea to Spain, responding to a rare bright spot of growing demand in depressed core European markets.

Opel, GM's loss-making European division which sold over 1 million cars last year, has attracted 110,000 orders from the region for the Mokka alone since the car went on sale in June 2012, a spokesman said on Wednesday.

The2 other models currently built at Zaragoza, the Corsa compact and Meriva compact van, are grappling with shrinking demand, pushing their 2012 sales down by 14% and 36% respectively.

"We'll be able to produce the Mokka in greater numbers and supply our customers more quickly," chief executive Karl-Thomas Neumann was quoted as saying.

Opel lost €1.4 billion in Europe last year as it struggled to cover the fixed costs of factories operating far below capacity. Auto sales in the austerity-strapped region plunged to a 2-decade low in May, further eroding hopes for recovery this year.

The GM division approved the shutdown of a German car factory in Bochum in April, the first such closure in decades and a key element in management's strategy to return to profit in 2015 at the earliest.

Opel's share of the EU's new-car market stood at 6.8% after 5 months, unchanged from last year, compared with 12.6% at Volkswagen, 7.5% at Ford and 6.2% at Peugeot.

Workers at the Zaragoza plant will initially use kits from South Korea to assemble the Mokka, aiming to gradually increase the SUV's local content in coming years. GM will spend €80 million to ready Zaragoza for Mokka production.

The U.S. parent, perennially beset by speculation it could abandon the Opel brand, said in April it planned to invest €4 billion in the marquee through the end of 2016 to support development and the launches of 23 new models and 13 new engines.