NEW YORK (TheStreet) -- Among the many factors that drove pre-bankruptcy General Motors (GM - Get Report) to the brink, chronic losses in Europe stand out impressively. Six years later, GM's financial prospects in that region could be looking up.
Karl-Thomas Neumann, GM executive vice president in charge of Europe, has drawn a line in the sand, declaring that GM will post a profit next year. He didn't say how big, though not reporting another loss would come as a relief at GM headquarters in Detroit. Over the past 15 years, GM has lost more than $18 billion in the region.
Neumann, a former Volkswagen (VLKAY) executive, is leading the simplification and renewal of Opel and Vauxhall models while forcing down cost. GM has pulled the plug on selling Chevrolets in Europe while using an imaginative approach to rehabilitate Opel's once-prestigious brand identity.
"With the introductions of Viva, Corsa and Adam, our small-car lineup is set," Neumann said. Cars developed by Opel are sold under the Vauxhall brand in Great Britain.
In 2014, GM posted an overall profit of $2.8 billion, down from $3.8 billion the previous year due to recalls and restructuring costs. In Europe, the automaker lost an EBIT-adjusted $1.4 billion last year, which included $700 million of restructuring costs.
GM is investing 4 billion euros through next year, promising 27 new models through 2018, as well as the introduction of OnStar connectivity this year.
As a result of its investments and restructuring, Opel managed to gain share of the European market in 2014, even as GM's overall footprint was shrinking due to Chevrolet's phase out.
"We had design problems and designs had become boring," said Tina Müller, who was hired from the cosmetics industry in 2013 as Opel's chief marketing officer. One of her initiatives was a German advertising campaign, "Umparken Im Kopf," translated roughly as Unpark Your Mind. In other words, think differently about Opel.
Along with new vehicle designs, fresh advertising seems to have worked. Opel has won a slew of design awards and its market share in Europe rose last year.
But GM, along with the rest of the automobile industry, has collided with a new obstacle in Europe, the collapsing Russian economy, which has slowed auto sales to a trickle. GM's factory in St. Petersburg, which had been running on three shifts, was reduced to two and then one, on slow speed.
"The ruble is so weak, and demand is down 40 percent" Neumann said. "We weren't localized enough," in terms of parts purchases, "so we're forced to pay suppliers in euros and sell vehicles in rubles."
Notwithstanding difficulties in Russia, Neumann isn't backing down on 2016 profitability.
If GM's progress in Europe holds up this year and next -- a big if, of course -- and U.S. operations can avoid another disaster like the ignition switch safety recall, the automaker's shares could begin to fulfill expectations. Twelve of 18 equity analysts rate GM a buy or a strong buy, with a mean price target of $42 a share, compared with its recent trading range in the mid-30s.
Europe is awash in economic, political and market upheavals, all of which are a drag on consumer optimism needed to sell new cars. GM's Opel rebound stands out as one positive among the negatives.