Internal Paper Predicts Massive Red Ink At Opel

Bertel Schmitt
by Bertel Schmitt
internal paper predicts massive red ink at opel

Without Opel, GM might not be the world’s largest automaker. But it would be a highly profitable automaker. Opel will cost GM approximately € 1 billion ($1.3 billion) in the coming year and will miss its restructuring plan. Reason for the shortfall: Opel will sell only 1.4 million cars next year, 100,000 less than budgeted. How do we know this? We don’t, but it is in an internal forecast of Opel. The document somehow came into the hands of the German magazine Capital.

Capital most likely did not find the document in a Rüsselsheim dumpster. The bad news look like yet another targeted leak, aimed at scaring the unions into compliance with more job cuts.

By the end of January, GM wants to see a business plan that shows how Opel will become profitable. Capital heard that Opel CEO Karl-Friedrich Stracke is working on an austerity program. Included in the plan are cheaper materials, suppliers that make cost concessions, increased outsourcing, serious cuts in R&D expenditures.

The magazine thinks that the days of the Opel plant in Bochum and the Vauxhall site in Ellesmere port are numbered.

The unions, which have it in writing that there will be no firings or plant closures at least until 2014, will fight the plans vigorously. A strike is possible if Opel breaks the contract. That would be one way to make fewer cars.

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6 of 23 comments
  • Robbie Robbie on Dec 15, 2011

    As long as so many of GM's offerings worldwide consist of vehicles designed by Opel, it is not clear to me whether Opel's losses are not simply a GM accounting gimmick to pressure the unions. Is there a financial expert here who can shed light on this?

    • Vaujot Vaujot on Dec 15, 2011

      I share that suspicion. I wouldn't be surprised if the engineering staff in Ruesselsheim is all on Opel's payroll yet their work product is used by GM worldwide and the IP is with GM.

  • Buickman Buickman on Dec 15, 2011

    typical GM, cut, chop, and close...characteristics of a company that doesn't have a clue how to sell.

  • SCE to AUX SCE to AUX on Dec 15, 2011

    "By the end of January, GM wants to see a business plan that shows how Opel will become profitable." Well, that's a novelty at GM. Here's a free hint: Don't produce a single Ampera. It's a known money-loser.

  • Redav Redav on Dec 15, 2011

    The strategy is interesting--make your company look bad to save some money as opposed to making it look good to sell more cars and hit your targets. Maybe it's just me, but I don't think any company will be successful long-term with those methods.

    • Buickman Buickman on Dec 15, 2011

      that strategy woked in the US where Red Ink Rick intentionally bankrupted the compnany after stripping the asset shelf. he got away with it because the union was complicit. German unions are not so easy to corrupt.