NEW YORK (TheStreet) -- General Motors (GM) - Get ReportCEO Mary Barra two weeks ago in Frankfurt presented the latest generation Opel Astra, a car that symbolizes GM's comeback efforts on the continent.
Next month, around Oct. 10, the first Astras will be shipped to dealers in Germany. The success of Astra -- or the lack of it -- will probably determine whether GM can achieve its goal of breaking even in Europe in 2016 and perhaps post solid profit a few years later.
GM's decision to mothball its operations in Russia due to political and economic instability was thought to jeopardize the automaker's European financial goals. BUT Karl-Thomas Neumann, chief executive officer for GM Europe, isn't backing down. And Volkswagen's (VLKAY) current problems -- a massive recall for faking diesel emissions tests and worldwide condemnation -- could help Astra with shoppers against its main competitor, the VW Golf.
"The entire team has done an outstanding job on the new Astra. It's another chapter in our comeback story," Neumann said. He noted that Astra will be GM's first European vehicle to feature OnStar, a connectivity format. In addition, massage seats will be available, as well as advanced technology headlamps with light-emitting diodes.
Since 1999, GM has lost about $18 billion in Europe and had contemplated selling its operations there, which include Vauxhall in Great Britain, during the global financial crisis. But the automaker reconsidered and has been determined to improve its products and refurbish the tarnished Opel brand. Neumann was recruited from VW, while Tina Muller, chief marketing officer, came over from the fashion industry.
VW, the market leader in Europe, last week took a charge of $7.3 billion to cover costs associated with the recall, fines and litigation stemming from accusations by the U.S. that it cheated on diesel engine emissions tests. The automaker said that up to 11 million vehicles worldwide could be affected. What's unclear is how consumers may react and whether the crisis may deter them from VW brands.
In the past month, Volkswagen has lost about 40% of its market capitalization, while GM's has been roughly flat.
Ferdinand Dudenhoeffer, professor at the University of Duisberg-Essen and head of the Center for Automotive Research there, told the Detroit News that "Astra and its advertising look very interesting." He said Astra has a chance to win market share from Golf as well as from Ford (F) - Get Report .
IHS, an automotive research firm, estimated that the European vehicle market will grow 6% this year frpm last, coming off a 10-year low. The improvement should continue, though not as much as this year. The confluence of factors affecting Astra could spell a very much improved financial picture for GM, in light of the massive losses the automaker has endured.
Doron P. Levin is the host of "In the Driver's Seat," a show broadcast by SiriusXM on Saturday at noon and Sunday at 9 a.m.
The writer has no financial interest in the aforementioned companies.