Just when it desperately needs some good news, General Motors Corp. is showing signs of a recovery in its long-suffering European auto business.

"There's a view the tide is beginning to turn" in Europe for GM, said GM Europe Chairman Frederick "Fritz" Henderson in an interview yesterday.

Henderson, who arrived in Europe just last summer, already has led GM through a bitter conflict with German union leaders last fall over the company's decision to shed 10,000 jobs in Germany as part of a broader restructuring planned to eliminate 12,000 GM Europe jobs by the end of this year.

"We're on a positive trajectory but not at an acceptable level," Henderson said.

GM's European recovery is still fragile and could stall. Yesterday, the European Automobile Manufacturers Association released data showing registrations of new GM cars fell slightly faster in May -- down 1.9 percent -- than overall demand for new cars, which was down 1.7 percent. GM says it still expects to post a loss of about $500 million in Europe this year and won't say publicly how it expects to do in 2006. A recovery at GM Europe also is no substitute for a turnaround in GM's much larger North American business, which accounts for more than half of GM's worldwide automotive vehicle sales.

But if GM can stop losing money in Europe, it would ease some of the pressure on Chairman G. Richard Wagoner Jr. as he confronts an arduous restructuring of GM's North American operations. With that comes the risk that GM could provoke labor unrest in the United States with its demand that its largest U.S. union, the United Auto Workers, accept cuts in health care benefits that the UAW says are guaranteed under a contract that doesn't expire until 2007.

For Henderson, solidifying a European turnaround could open the door to a bigger job at GM headquarters in Detroit.

As part of a management restructuring in April, Wagoner is acting as GM's chairman, chief executive and head of North American operations. GM has no president or chief operating officer. In the same reorganization, Henderson's role as head of GM Europe was diminished because European product development and manufacturing operations that once reported to him now report to global functional chiefs.

Some analysts speculate Henderson could return to Detroit to take a broader role under Wagoner. Others suggest Henderson could be a candidate to replace Wagoner if GM's board loses patience.

Before moving to Europe, Henderson was head of GM's Asia Pacific operations, where he presided over a period of rapid growth: The division earned $577 million in 2003, more than three times the profit of $188 million in 2002. But his tenure in Asia -- little more than two years -- was cut short last year.

In Europe, Henderson inherited an operation that was last profitable in 1999 and has since had losses of $2.6 billion. With GM plants located predominantly in high-wage Western Europe, the company's mainstream European brands, Opel and Vauxhall, came under increased pressure from lower-cost Asian brands following Europe's relaxing of trade barriers in the late 1990s.

Henderson said GM intends to "fully utilize" its assembly plant in Gliwice, Poland, where -- to the dismay of GM's German unions -- it has already announced plans to make the Opel Zafira minivan. He didn't rule out sending more work to Eastern Europe but said that cost cutting alone won't restore GM Europe's profitability.

Henderson said his focus is on reviving the "brand health" of Opel and Vauxhall and expanding the portfolio of GM's Swedish luxury brand, Saab, which has been losing money for years.

A key part of Henderson's product strategy in Europe is the decision to aggressively market the Chevrolet brand, partly by rebadging cars made in South Korea by its partner Daewoo Auto & Technology Co. and selling them in Europe under the Chevrolet nameplate.

Many industry analysts and some German labor leaders criticized the move, saying Chevrolet's all-American, low-budget image wouldn't connect with European tastes. But Chevrolet's sales are being helped by demand in former Iron Curtain countries whose citizens have long associated American brands with a certain quality of life.

"When I was young, Chevrolet was like a dream to many in this part of the world," said Wojciech Siuchninski, a 50-year-old tableware salesman in Warsaw who recently purchased a Chevrolet Lacetti 1.6 hatchback. "Nobody sold this kind of car, but everybody knew the name. . . . When I speak with people [today], they think it is a very good car."

Boosted by higher sales of its entry-level Chevrolet brand and an aggressive marketing campaign, GM has increased sales in Europe slightly this year -- by 0.4 percent -- even as overall demand for new cars in Europe has fallen -- by 2.4 percent for the first five months of the year, according to the European Automobile Manufacturers Association.

"Nobody's ever done a turnaround only on costs," Henderson said. "It's done by getting your costs right and then obviously [getting] the benefit from your product launches. . . . We have to get that done and we have to get that done fast. . . . Customers don't buy plants. They buy cars."

General Motors Europe Chairman Frederick "Fritz" Henderson meets with the media in Geneva.