By on November 15, 2012

GM CEO Dan Akerson re-affirmed his committment to Opel while speaking at company headquarters in Ruesselsheim, Germany.

A copy of the speech obtained by Reuters has Akerson re-assuring workers that GM is in it for the long haul with respect to Opel.

“As a global auto company, GM needs a strong design, engineering, manufacturing and sales presence in Europe. There’s room for Chevrolet in Europe but Opel fulfills that role…Recommendations that we ‘cut and run’ show you that some people simply do not see how important Opel is to our success.”

There has been significant pressure from analysts to divest from Opel, but Akerson’s speech appears to be a strong signal that GM will hang on to Opel until the bitter end.

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15 Comments on “GM Won’t “Cut and Run” From Opel: Akerson...”

  • avatar
    el scotto

    How is a company that consistently loses millions and millions of dollars important to GM’s success? A bunch of smart employees is cool, but Opel is a money funnel.

    • 0 avatar

      Allowing Opel to fail is akin to handing a checkbook to Volkswagen. And Volkswagen would use that checkbook to increase its assault in other markets where GM and VW compete against each other, such as the US and China.

      Opel has enough market share to be valuable. But it needs to move upmarket if it is to compete against the homegrown German automakers. Otherwise, it would be better off slapping Opel badges onto cheaper Asian imports, because Opels currently sell for too low of a price to be profitable.

      • 0 avatar

        Agreed – Opel has slowly moved upmarket after VW started the trend in the late 90’s. It makes sense for them to continue both to justify their EU prices and to be suitable donor vehicles for Buick.

      • 0 avatar

        Opel is not an upmarket automaker. They don’t play at all in the executive sedan segment.

        Opel is largely shut out of the executive company car market, and nobody can succeed in Europe today without having vehicles that can be leased in corporate fleets.

        Without a range of cars that can appeal to senior executives, GM Europe is assured of being perpetually shut out of much of the European company car market, particularly in Germany. Since the upper end of the European market is dominated by corporate fleet, that means that those companies that aren’t popular with corporate fleets have to settle for the bottom. It’s a tough position to be in, and quite different from the US situation.

      • 0 avatar

        PCH -I agree, but the same applies to VW brand vehicles (the Passat competes with the Insignia). VW have Audi to fill that executive market gap. Which is where Cadillac could come in to play. Opel need to do what VW did and be upper middle with brands below (Skoda and SEAT). Opel has increased the perceived quality of their vehicles (soft touch interiors etc) which is what Ford has also done. This has left market space at the bottom filled by Dacia and others.

      • 0 avatar

        “Opels currently sell for too low of a price to be profitable”

        That’s the reason they should be making Buicks, and Chinese style stretched wheelbase models for executives. They need to expand the Buick line anyway, they’re short in the full-size sedan and upscale midsize offerings.

  • avatar

    I’m sure GM won’t want to give up it’s current amount of volume, but it sounds like they see Opel as an R&D branch as well as their European delivery outlet… so why not slowly size it down and keep it open as a sort of skunkworks?

  • avatar

    If GM has a realistic PLAN to making Opel profitable OK, but a wish or hope is not a realistic plan. I do not see how continuing to lose money will ever benefit GM. If Opel engineering/design is helping GMNA or other parts of GM, I would think this would be reflected in GM’s accounting and that Opel’s cost would be reduced by that amount. IIRC Saturn lost money every year of its life but one, yet Wagoner intended to keep Saturn before he was booted. I wonder if Akerson has his pride on the line since he was the one who decided to retain it after it was headed for the auction block. A competent board would demand light at the end of what looks like a long and dark tunnel.

    • 0 avatar

      GM does have a realistic plan to turn Opel around. Closing or Selling Opel will cost just as much if not more. They have made some progress so far but is going to be a while before Opel breaks even. GM expects break even by mid decade, which IMO is not too optimistic.

      Increased per vehicle revenue by $650 in 2012.
      23 new models and 16 new engines by 2016.
      Cut 2300 jobs so far with 300 more to go by year end.
      Reduced inventory by 100,000 units since Feb.
      Consolidate vehicle production. Close Bochum by 2016.
      Source vehicles from low cost South Korea where the Opel/Vauxall Mokka will be built. 45,000 Pre-orders for the Mokka so far.
      The joint purchasing and logistics deal with PSA may save an estimated $1B each year starting 2015. PSA and Opel will share development costs for four car projects saving a lot on fixed costs.

      Some of these steps will obviously not materialize the way GM hoped. It however is a good step forward. GM will not only lose market share if they sell Opel. They stand to lose a lot on economies of scale since most of the cars sold in other markets are based on Opel platforms.

      You are correct. Both Ackerson and Girsky didn’t want Opel sold.

  • avatar

    GM should just give it to Fiat and let Segio worry about it. Worked with Chrysler.

  • avatar

    Not only would it be the equiv. of giving free marketshare to VW and Ford, but the costs related to Buick would still have to be amortized and without having opel to dump them on (I bet the expenses for developing the platforms, engines, tooling, etc., all stay on Opel’s books while all of the profit from Buick in US and China stay in US and China w/o allocating back, makes since for tax purposes, also makes Opel’s situation look worse than it is). This would make Buick cost more in both Markets (don’t know about significance to US), but China is huge and buick’s market segment is highly competitive.

    When Opel released their last equiv. to the Mondeo it was built to be 80% of what the mondeo was, that is a strategy that would kill any company (this was also pre-BK), My four yearly trips to the fatherland over a period of four years, The Headquarters and largest production facility (roughly 500 mil. euro/yr revenues, so I had a nice size parking lot to review), yes VW was #1 by a huge margin, Ford was a clear #2 and it seems that each year there were more Fords and less Opels (the executive fleet was all Audis, BMW’s and Mercedes ofcourse)

  • avatar

    “GM will hang on to Opel until the bitter end”

    And that’s what it will be.

  • avatar

    GM should threaten Opel unions into submission if they decide to play hardball. Use the Hostess shutdown as an example to let unions know their fate will be the same if they decline any wage concessions or layoffs. The unions have killed an iconic American snack brand. If a company that sells fat and sugar to Americans can’t survive the union, how can Opel? USPS posted a record $16B loss for the year and is at the risk of going bankrupt soon. Good job, unions! You’ve just about killed every company you lay your claws on.

    • 0 avatar

      I’m a huge fan of Hostess and I remain confident that Hostess will actually come back, better and stronger and even more popular than before.

      The (foreign) owners of Pabst have expressed a desire to take over Hostess and resume operations with different employees. (Read that as current and former employees need not apply.)

      I think the Bakers Union badly overplayed their hand here. Ahh, but then so did the UAW with Chrysler and GM, pre-bailout. Except with Hostess, there will be no taxpayer funded bailout and the unions are busted.

      My point is that Opel’s union should tread carefully, even though GM is backed by the full faith and credit of the United States Treasury.

      GM in the US will never go under, but GM’s foreign affiliates may get crunched if push comes to shove and it becomes a choice of keeping the UAW working or the foreigners.

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