It surely came as no surprise to General Motors executives that their European division is once again, bleeding cash. After all, they knew that Opel and Vauxhall had already lost US$580 million in the first nine months of 2011.
However, as the Wall Street Journal reports, they weren’t prepared for the “horrendous” fourth quarter losses. Therefore, despite declaring last week that it is determined to turn around Opel, GM is now seriously reconsidering its options.
According to the report, an unnamed GM official said on Tuesday that the U.S. group is almost fed up with its European brands’ inability to make progress: “There is an increasing frustration with Opel and a feeling that the cuts two years ago did not go deep enough. If Opel is going to get fixed, it is going to get fixed now and the cuts are going to be deep.”
This surely does not bode well for the future of Opel and Vauxhall employees and their respective plants.
An IHS Automotive report that was published today goes as far as to suggest that GM might be forced to dump both brands and replace them with Chevrolet.
“Would it be beyond the scope of possibility of GM to abandon the Opel and Vauxhall brands altogether?” says the report. “Possibly, but a properly radical plan may be to just retain four or five production sites and turn them into assembly plants for Chevrolet models.”
IHS points out that Chevrolet could be repositioned in Europe “as a value, lower-mid market brand to compete alongside the likes of Hyundai, Kia and Skoda.” But if that happens, who will develop GM’s small cars? IHS has an answer for that, too: “It will retain the Russelsheim R&D facility for an enhanced global vehicle development program to create true ‘world’ cars, such as Ford is doing now.”
GM is currently engaged in discussions with the labor unions and wants to make severe cuts, lowering the brand's break-even point since the European new car market is facing a crisis.
Among the options put on the table are the closing of Opel's assembly plants in Bochum, Germany and Ellesmere Port, England, which employ around 3,100 and 2,100 workers respectively. Up until now, there has been no agreement and the powerful German unions will, most likely, object to this plan.
Story References: WSJ & Detnews
7 Comments:
The company that can't manage its way out of a paper bag officials' are shocked? What else is new? Executives always know what's going on...yet another "GM is officially full of crap" SOP. Is GM going to need more bailout money for its newfound surprises or simply a ruse to rebrand to its world domination brand of Chevy?
The real problem is not Opel, but GM. In this company Opel acts only as a
brand, the parent company can rotate the numbers just the way they
want. So they can leave Opel´s development centre work for free for
Chevrolet, but the engineers are still paid by Opel -> loss. In some
countries Opel cars are sold and built as Buicks or Chevrolets, without
that Opel earn money thus or at least get cash payments by licensed. The
foreign markets buy these cars for a significantly below manufacturing
costs, but at Opel run at the full cost-> loss. In addition, of
course it is clear that the Western European market is too small to be
really profitable. Most of VW brands are expanding their business in
other regions, where they can compensate the costs. Due to the
limitation by GM that Opel cannot sell itself in most boom countries
like China or India, the number of units under the Opel brand are too
low -> loss. (In truth, GM is building more Opel cars around the
world than Opel is selling in Europe. For example, take all the sales of
Opel models sold under the Chevy brand in Brasil to Opel, so then you
see the whole quiet different. I gues, most of you forget that Opel is
an operating company, even as a GM subsidiary! GM gives Opel hard
conditions, so that an export does not pay in reality.
I hate this one-sided reporting! You should do better researches about the way GM has operated mismanagement at Opel in the late 80s and the 90s. Have you already forgot, which company felt bankruptcy? IHS seems to have no idea. To kill a brand like Opel here in Europe would be like killing the Chrysler or Ford brand in North America! Opel is not a niche brand here like Buick in North America and a restructuring would be a huge project and would cost GM a lot more than to Opel profitable again, but by aLOGICAL concept.
Very true. GM moves the numbers around to make itself look good in the eyes of the American consumer and government. How do you think GM went from $50 billion in the red and losing money hand over fist to all of a sudden making money? By milking it's overseas operations. Charging it for things used from the GM warehouse of parts and products and by not paying those overseas operations (in this case Opel) for use of it's products and development.
GM is just another big American firm screwing things up by thinking bigger is better. It is going to do the same to Opel as it did to Saab. Let the company be hollowed out until there is nothing left, then say the company did not fulfill its potential and that there is not market for it's cars and then refuse to sell it to someone who is willing to make a go of it, because GM is afraid some of it's (ie Opel's) tech will fall into a rivals hands.
Come on GM , if you really want to be the biggest and best you'd let Opel sell it's products in China and other emerging markets, I'll bet you anything they will outsell Buick and your other US branded cars.
I think GM still has not gotten the fact that the world does not hold American cars in high regards in terms of quality or driving experience. There is a reason why people the world over pay a premium for European and especially German cars. If GM thinks it can replace Opel with Chevrolet or Buick it is going to alienate a very large portion of buyers.
GM is not interested to make its foreign
subsidiaries into strong units on the worldwide market, because it may
lose the balance of power for the parent company.
the only company thats doin great in europe is VOLKSWAGEN!!!!!! PSA is struggling, renault hangin in there due to nissan, ford of europe strugglin, and chrysler makes more money than fiat, why? cause fiat is doin worse than all of them. europe is a mess right now, dont blame G.M because opel loosing money!
sounds to me like they intend on winding down Opel than selling it, a harsh reality is that they are completely stumped as to what they could do to turn Opel around but they won't sell it cause they know the moment they sell it, it will be formiddable again, GM really needsto start thinking outside the box with Opel, they can't approach it the same way the did with SAAB that's a proven and a failed method, they are stifling these brands by not letting them be independent enough.... by the way how is Buick doing...is'nt it also Opel?
Post a Comment