Reilly Predicts $2 Billion Loss For Opel
Did you buy the GM share? If the answer is in the affirmative, then you should stop reading immediately. There are great new stories my Murilee Martin, just as a for instance.
Are we entre nous? Ok, here are the bad news: GM’s black hole in Germany, called Opel, turns out to be more humungous and more financial-matter sucking than ever imagined.
A few days after the GM share was placed (“7 times oversubscribed!”) Opel’s chief Nick Reilly told the ugly truth to Germany’s Wirtschaftswoche: Opel will rack up a loss of $2b this year. In the first three quarters (leading up to the IPO), Opel was $1.2b in the reds. In the last quarter, $800m of red ink will flow. And the worst is yet to come.
The restructuring is “dragging on” says Reilly. Opel wants to get rid of 8,000 jobs, 4,000 of those in Germany. This is expensive. To get rid of 2,600 workers in Antwerp, GM had to cough up $532m – a little bit over $200,000 per worker. In Bochum, 1800 jobs will be eliminated. Workers are holding out and refuse the offered six figure golden parachutes in wholesale fashion. They want more. Just getting rid of all these workers all over Europe can cost a few billions. Reilly knows that.
“Next year, we might have a problem if there is no change in the acceptance of our offers,” said Reilly. It doesn’t look like it. Reilly also admits that he has problems selling Opels in Germany. “That’s a special case, caused by the long debates about government aid.”
“Profits would be the best advertising,” says Reilly. That campaign is far away. Next year, Reilly wants to break even “before restructuring costs.” The costs will be in the books. In big fat red numbers.
Before someone says “rounding error” again when talking about Opel numbers, bone up on your math skills: $2b in losses for 2010 are the same as the $2b in Q3 total worldwide profits GM had touted before the IPO. Rarely a rounding error. Also, those happy days won’t be here again soon. When GM’s stellar profits were announced two weeks ago, GM CFO Chris Liddel warned that Q4 earnings would take a hit.
That was drowned out by the pre-IPO drumbeat. As reasons for a less than stellar fourth quarter, Liddel cited “a different production mix, the cost of launching new vehicles such as the Chevrolet Cruze, and the electric Volt, and higher engineering expenses for future products.”
Another possible reason for a disappointing Q4 makes the rounds in the business: In October, GM dumped a lot of high margin cars on dealer lots, and booked them as sales. Rumor has it that the unexpected “demand for high-margin pick-up trucks and crossover vehicles“ wasn’t entirely customer driven. But it surely goosed the numbers.
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- ToolGuy "We're marking the anniversary of the time Robert Farago started the GM death watch and called for the company to die."• No, we aren't. Robert Farago wrote that in April 2005. It was reposted in 2009 on the eve of the actual bankruptcy filing.The byline dates are sometimes strange/off with the site revisions (and the 'this is a repost' note got lost), but the date string in the link is correct (...2005/04...). Posting about GM bankruptcy in 2005 was a slightly more difficult call than doing it in 2009.-- The Truth About Calendars
- Kat Laneaux Agree with Michael500, we wasted all that money just to bail out GM and they are developing these cars in China and other countries. What the heck. I understand the cheap labor but that is just another foothold the government has on their citizens and they already treat them like crap. That is pretty disgusting to go forward to put other peoples health and mental stability on a crazy crazed, control freak, leader, who is in bed with Russia. Thought about getting a buick but that just shot that one out of the park. All of this for the greed. They get what they lay in bed with. Disgusting.
- Michael500 Good thing Obama used $50 billion of taxpayer money to bail them out and give unions a big stake. GM is headed to BK again with their Hail Mary hope of EVs. Hopefully a Republican in office will let them go BK the next time, and it's coming. The US economy is not related/dependent on GM and their Chinese made Buicks.
- MaintenanceCosts "Rural areas hardly noticed COVID at all."I very much doubt that is true in places like the Navajo Nation or the Kenai Peninsula in Alaska, some of which lost 2% or more of their population to COVID.No city had a death rate in the same order of magnitude.Low-density living is a very modern invention. Before cars, people, even in agricultural areas, needed to live densely to survive.
- Wjtinfwb Always liked these MN12 cars and the subsequent Lincoln variant. But Ford, apparently strapped for resources or cash, introduced these half-baked. Very sophisticated chassis and styling, let down but antiquated old pushrod engines and cheap interiors. The 4.6L Modular V8 helped a bit, no faster than the 5.0 but extremely smooth and quiet. The interior came next, nicer wrap-around dash, airbags instead of the mouse belts and refined exterior styling. The Supercharged 3.8L V6 was potent, but kind of crude and had an appetite for head gaskets early on. Most were bolted to the AOD automatic, a sturdy but slow shifting gearbox made much better with electronic controls in the later days. Nice cars that in the right color, evoked the 6 series BMW, at least the Thunderbird did. Could have been great cars and maybe should have been a swoopy CLS style sedan. Pretty hard to find a decent one these days.
"GM’s black hole in Germany, called Opel, turns out to be more humungous and more financial-matter sucking than ever imagined." The size and future longevity of this black hole was very well-imagined by the prospective "buyers" who refused to participate unless they were made whole by long-term US federal government guarantees and subsidies. No river of US taxpayer cash, no deal.
Wow - MikeAR you need to calm down. I will comment this time and then get back to cars, after all that is what this site is for. Bush had good points and bad points (you're the one with the anger against Obama). To say he is more intelligent than Obama is a stretch even for you. I suppose going to Harvard and Columbia and then teaching at Chicago in Constitutional Law is for dummies. With that I will get abck to cars - infintely more interesting. BTW enjoy redstate.