Automotive News To GM And Ford: Get Out Of Europe Now

Bertel Schmitt
by Bertel Schmitt
automotive news to gm and ford get out of europe now

Over the last 12 years, GM lost $16 billion in Europe, more than a billion each year. Ford is doing a bit better, but it sits on excess capacity of 300,000 units in Europe and expects a loss of $500 million to $600 million. Automotive News [sub] recommends to both: Pack up and leave. Says Luca Ciferri in AN:

The bottom line is that Europe is the biggest trouble spot in GM’s and Ford’s global empires and could prevent both from sustaining their success.

Ending production and sales in Europe would fix a lot of the companies’ financial problems, but it would be a massive blow to each automaker’s brand image because no one likes a quitter.

For decades, the automaker mantra has been “build where you sell.” But if there is not enough of a market to build cars profitably, then drastic steps must be taken.”

At least at GM, Fritz Henderson is being damned each day for not selling Opel and the Russians.

Two weeks ago, Tom Walsh wrote in the Freep:

“Was Fritz Henderson right after all, back in 2009, when he pushed for General Motors to sell its money-losing Opel subsidiary in Germany?”

Even if GM is able to align its European capacity and costs with the depressed sales volumes in the region, real questions persist about whether GM can generate long-term profit margins that would generate an adequate return on capital in a very crowded market.”

There is no salvation in sight at GM. All Steve Girsky, GM’s designated hitter in Europe, can say is this:

I don’t want to lead anybody to believe there’s any bright spot in Europe right now, although I will say it does look like things appear to be bottoming,”

Things may appear be bottoming because it can’t get any worse. Also, the agony will last longer than planned. Agreements with unions prohibit GM from closing plants before the end of 2014. Now, GM proposed a deal to extend this to 2016, in exchange for salary concessions.

Closing one plant alone would cost more than a billion dollars. The only way around this is bankruptcy. Many, among them Arndt Ellinghorst, head of Automotive Research at Credit Suisse in London, say that Ford and GM need their European engineering resources. At a cost of a billion and more a year, these are expensive resources, especially at a time when tech centers move to China and India.

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2 of 24 comments
  • Marcelo de Vasconcellos Marcelo de Vasconcellos on Jun 29, 2012

    Yikes! Stupid short sighted advice. In case of GM sounds like at least a talking pont. In case of Ford, reeks of America-myopic-disastor advice. Most of Ford world wide sales come from Europe...

  • Carfriend313 Carfriend313 on Jul 03, 2012

    To make it simple, can you imagine the complexity of GM or Ford leaving Europe? The redundancy payments, the complication of adding production elsewhere, setting up new engineering centres elsewhere. At least now they can justify Europe as an expensive engineering consultancy. They do, however, need to increase either sales or decrease capacity in order to provide better capacity utilisation.

  • Brandon What is a "city crossover"?
  • Tassos What was the last time we had any good news from Ford? (or GM for that matter?)The last one was probably when Alan Mulally was CEO. Were you even born back then?Fields was a total disaster, then they go hire this clown from Toyota's PR department, the current Ford CEO, Fart-ley or something.He claims to be an auto enthusiast too (unlike Mary Barra who is even worse, but of course always forgiven, as she is the proud owner of a set of female genitals.
  • Tassos I know some would want to own a collectible Mustang. (sure as hell not me. This crappy 'secretary's car' (that was exactly its intended buying demo) was as sophisticated (transl. : CRUDE) as the FLintstone's mobile. Solid Real Axle? Are you effing kidding me?There is a huge number of these around, so they are neither expensive nor valuable.WHen it came out, it was $2,000 or so new. A colleague bought a recent one with the stupid Ecoboost which also promised good fuel economy. He drives a hard bargain and spends time shopping and I remember he paid $37k ( the fool only bought domestic crap, but luckily he is good with his hands and can fix lots of stuff on them).He told me that the alleged fuel economy is obtained only if you drive it like a VERY old lady. WHich defeats the purpose, of course, you might as well buy a used Toyota Yaris (not even a Corolla).
  • MRF 95 T-Bird Back when the Corolla consisted of a wide range of body styles. This wagon, both four door and two door sedans, a shooting brake like three door hatch as well as a sports coupe hatchback. All of which were on the popular cars on the road where I resided.
  • Wjtinfwb Jeez... I've got 3 Ford's and have been a defender due to my overall good experiences but this is getting hard to defend. Thinking the product durability testing that used to take months to rack up 100k miles or more is being replaced with computer simulations that just aren't causing these real-world issues to pop up. More time at the proving ground please...