Opel Profit Rewarded With Investment
While GM bleeds cash at home, its overseas business continues to fare pretty well. Auto Motor und Sport reports that GM's European Opel division posted a record 572k sales in the first quarter of this year, earning a pre-tax profit of $198m. Although profit is its own reward (and apparently an actual priority for GM), GM is rewarding its German branch with a $9b investment over the next five years. $2.5b of the cash will go towards renovating Opel factories in Rüsselsheim, Kaiserslautern, Bochum und Eisenach. The remaining $6.5b will help Opel bring 17 new passenger cars (and three new commercial vehicles) to market by 2012. And now the bad news: Opel's European market share declined from 9.7 to 9.6 percent. Opel GM-Europe boss Carl-Peter Forster says never mind, pointing to hbis employer's 11.6 percent Russian market, where car sales jumped by 78 percent in the first quarter. "Russia will be Europe's largest car market by next year at the latest," says Forster. With Opel providing several of GM's most popular U.S. products (Saturn Astra and Vue), GM's investment could well keep the sinking ship afloat for an extra quarter or so. Just kidding. On both counts.
More by Edward Niedermeyer
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Much like the N. American shift to manufacturing in Mexico, the EU is seeing a shift to the cheaper labor in the former soviet states. I see no reason to think that the future will hold anything other than more movement towards lowering labor costs.
And cheaper materials I might add, which invariably is the way to lower quality. And this is for ALL auto manufacturers :-(
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