The current mantra at General Motors: Everybody and everything look sharp and attractive for the coming IPO. During the sprucing-up operations, there are times when someone at RenCen sighs: “Maybe we should have gotten rid of Opel after all.”
Opel is a big black eye in GM’s lifted face. The European car market is in decline. Opel’s sales decline even faster. Opel is losing market share. Maybe selling fewer cars is the solution, because Opel loses $483 on each vehicle they sell, says the Wall Street Journal.
While GM posted a second-quarter profit of $1.3 billion, Opel delivered a $200m deficit. In the first quarter, it was $500m. When the year is over, Opel may have lost more than $1b. Letting 8,000 people go does not come cheap in Europe.
Opel’s Nick Reilly is positive that Opel will break even by 2011 and turn a profit in 2012. For a good laugh, Reilly adds that Opel may be profitable earlier should European car sales rebound more quickly than expected. Nobody believes it.
In Germany, Opel’s market share sunk to 7.7 percent from 9 percent in 2009. Across Western Europe, Opel’s share fell to 7 percent through the first six months of the year, down from 7.4 percent last year.
“They’re going to have a hard time in stock promotion road shows in discussing why, when they were divesting as much as they could, they didn’t sell Opel,” said Scott Sweet, senior managing partner of IPO Boutique, a Tampa, Fla., IPO advisory firm.