Opel Eats GM's Profits Alive
When GM will announce 4th quarter and year-end earnings tomorrow, a lot of fingers will be pointed at Opel, and on GM CEO Dan Akerson who decided to keep the hemorrhaging unit instead of selling it off to Magna and the Russians. Bloomberg expects that tomorrow’s quarterly profit will be “GM’s lowest since it emerged from bankruptcy in 2009,” despite record sales in the U.S. and China. According to Bloomberg,
“The darkest cloud on GM’s horizon is Opel, the biggest contributor to GM’s $14.7 billion in European operating losses since 1999.”
Adam Jonas, an analyst at Morgan Stanley Jonas, estimates the value of GM’s European operations at a negative $8 billion. The automaker’s China business would be worth $10 billion, he said.
“The negative value of GM Europe is almost as big as the positive value of GM China,” Jonas said.
GM shareholders will demand action to cut German losses, but unions in Germany point to the contracts with GM that rule out further plant closures and layoffs.