Finance, engineering, purchasing, manufacturing, marketing and planning from the three separate divisions will now be concentrated at its regional headquarters in Zurich.
Fritz Henderson, head of European operations, is promoted to the new position of chairman of General Motors Europe.
Carl-Peter Forster, head of the biggest division, Adam Opel AG, will be his deputy as GM Europe president. Hans Demant, in addition to retaining his responsibilities as vice president of engineering for GME, succeeds Forster as managing director of Adam Opel AG.
Product development chief, Bob Lutz, said at a press conference that the changes would not, by themselves, put GM Europe back in profit, but they would help it catch-up with rivals.
Henderson met with employees across Europe in a satellite broadcast to explain the organisational moves and the future direction of the company.
"Today we're asking all of our European employees to recalibrate themselves to a mindset of working for General Motors overall, instead of an individual brand or country operation," Henderson says.
"While maintaining brand character and integrity is vital, working together as one team is equally critical to future success. These are not mutually exclusive goals."
Officials would not say whether more plant closures or layoffs would be needed, saying only that such decisions would emerge in the weeks ahead.
GM Europe suffered a bigger loss in the first quarter of 2004 at $116m (£63.3m) up from $65m (£35.4m) a year earlier.