The current mantra at General Motors: Everybody and everything look sharp and attractive for the coming IPO. During the sprucing-up operations, there are times when someone at RenCen sighs: “Maybe we should have gotten rid of Opel after all.”
Opel is a big black eye in GM’s lifted face. The European car market is in decline. Opel’s sales decline even faster. Opel is losing market share. Maybe selling fewer cars is the solution, because Opel loses $483 on each vehicle they sell, says the Wall Street Journal.
While GM posted a second-quarter profit of $1.3 billion, Opel delivered a $200m deficit. In the first quarter, it was $500m. When the year is over, Opel may have lost more than $1b. Letting 8,000 people go does not come cheap in Europe.
Opel’s Nick Reilly is positive that Opel will break even by 2011 and turn a profit in 2012. For a good laugh, Reilly adds that Opel may be profitable earlier should European car sales rebound more quickly than expected. Nobody believes it.
In Germany, Opel’s market share sunk to 7.7 percent from 9 percent in 2009. Across Western Europe, Opel’s share fell to 7 percent through the first six months of the year, down from 7.4 percent last year.
“They’re going to have a hard time in stock promotion road shows in discussing why, when they were divesting as much as they could, they didn’t sell Opel,” said Scott Sweet, senior managing partner of IPO Boutique, a Tampa, Fla., IPO advisory firm.
Henderson’s legacy.
I think that’s unfair. Henderson had gotten rid of Opel, and was told to tell Merkel by none other than Big Ed that GM had recanted and did not want to sell.
It was all documented here on TTAC less than a year ago.
Henderson ran GM Europe for a few years, yet like most rotated and ineffective GM executives, he failed to make any lasting impression. plus he LIED to Congress. good riddance!
Which GM executive hasn’t lied to the American public? One minute they want to keep Opel, next minute move out of the RenCen, next minute the other way around, then the conversations didn’t exist, then they did and they want to build rocket ships to the moon … you can’t trust GM on anything.
Fritz betrayed his retail partners by lying through his teeth about saving money by closing dealers. Obama is just as much a phony saying he cares about jobs. they can both rot in hell.
If they had gotten rid of Opel, then they would have another problem – where would many of their (mid-size) models be developed? They don’t do much development in the US – only pickups, Corvette….
Good call tced2. And if they get rid of Daewoo, where will GM smalls cars come from.
I don’t see the IPO happening for a good while – too much to risk for GM.
“They’re going to have a hard time in stock promotion road shows in discussing why, when they were divesting as much as they could, they didn’t sell Opel”
Not if they give the true answer: There were no buyers.
Anti-trust law probably forbids it, but the other European manufacturers should have put up a pool of money to buy Opel out, and shut it down.
The Russians wanted to buy Opel. Buying for closure is a bit hard with European labour laws. What they should have done is sell GMNA as that is he real problemchild
Maybe Opel should be the one going to an IPO. GM can pick up some cash toward the restructuring, maybe enough to make it more attractive, and still own enough to protect the IP. Let Nick Reilly run Opel independently and invest the IPO proceeds. Once shares are traded and GM takes its hands off, it can slowly divest itself of its stake and walk away. What’s wrong with that strategy?
Opels share has declined mostly because it lacks model range, principally because Detroit made the strange decision to sell Daewoos in Europe under the Chevrolet badge directly competing for range with Opel.
Selling Opel was always a non-starter ; the company has too many patents and designs that GM uses in other cars around the world. For instance, the Malibu owes a lot of its components from the Opel Insignia.
Opel is too valuable to GM as its its foothold in Europe (Vauxhall in Britain) and is a supplier of global technology GM cannot get elsewhere. Europe uses nearly 80% of its cars are diesel and the “quality curve” has historically been higher there. The new Buick Regal is the Opel Insignia, European Car of the Year when introduced. Its a great car and represents some of the best design, engineering, execution and launch in GM’s entire organization. If GM lets Opel go, what does it do, import its Korean, Chinese, Australian or American cars to fill European showrooms? Selling Opel is another nail in GM’s coffin. Anyone who thinks selling Opel is a good idea is an idiot. In fact ALL Buick’s should be European Opel’s or Australian Holden’s and Chevy can share platforms from other global platforms of GM Korea, China, while Cadillac gets 150% of the best of GM America.
It was all documented here on TTAC less than a year ago. Once shares are traded and GM takes its hands off, it can slowly divest itself of its stake and walk away.
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