Opel/Vauxhall News: Morgan Stanley Says GM Should Say Goodbye To Opel

[William Maley]

William Maley

Staff Writer - CheersandGears.com

September 10, 2012

Last Thursday, Morgan Stanley released a report saying GM should sell off Opel and settle it losses.

The report says GM has lost $10 to $20 billion over the past three years to Opel. If GM keeps the brand, the report says it will cost it up to another $12 billion over the next 10 years. Closing Opel isn't a good option at all says the report due to the enormous costs of winding down manufacturing operations in Europe. The report goes on to say that if GM was to sell Opel, that it would cost between $7 and $13 billion dollars.

UBS auto analyst Colin Langan told the Detroit Free Press that if GM was to sell off Opel, it could have some problems trying to find a buyer.

"Automakers that want to grow in Europe would likely look to build capacity in lower-cost eastern Europe, rather than acquire high-cost western European facilities," Langan said.

"We are committed to Opel and believe we can restore it to long-term profitability," GM spokesman Jim Cain told the Detroit Free Press when asked about the report.

Source: Detroit Free Press

William Maley is a staff writer for Cheers & Gears. He can be reached at [email protected] or you can follow him on twitter at @realmudmonster.

View full article

[RjION]

Opels between and rock and a hard place, and I don't see the hard place going away.

[riviera74]

According to the Free Press article, only Daimler, BMW and VW are doing well in Europe.

It is past time for GM (and Ford) to shutter plants and get out of that economic pit that is Europe. Western Europe seems bent on preserving socialism at the expense of sound economics. Automakers are not charities: dump the plants and insource the engineering to the USA right now.

Edited September 10, 2012 by riviera74

[G. David Felt]

I see a greatly reduced Opel. Best thing is to take a hybid approach to this. You need to keep a connection to your Euro Customers, but Opel would best be served by reducing down to minimal engineering to make sure product is inline with Euro requirements and taste. Manufacturing, reduce to minimal but otherwise close the over capacity plants and move to eastern Europe. GM should use their Opel distributors and build out a master dealership that can cover Cadillac, Chevy, Buick and Opel and call it good. No need to have stand alone dealers.

I believe you can reduce Opel down to being profitable, but it will cause some bad press due to the massive closures to right the ship. They cannot continue with the bleeding they currently have.

Time for front line dressing of the wounds and cut off the damaged/dead plants now.

[daves87rs]

TIme to put it to pasture...

[Justin Bimmer]

Um, how does GM sell when there are no buyers?

[ZL-1]

So Morgan Stanley is trying to play with GM stock, eh?... Tsk... Tsk...

[Robert Hall]

So Morgan Stanley is trying to play with GM stock, eh?... Tsk... Tsk...

Yep..I wouldn't trust them...just another corrupt Wall Street firm.

[G. David Felt]

ZL-1, on 11 September 2012 - 03:08 AM, said:

So Morgan Stanley is trying to play with GM stock, eh?... Tsk... Tsk...

Yep..I wouldn't trust them...just another corrupt Wall Street firm.

True, this is a company trying to play the stock market like any other stock manipulating company. But they do truly hit the nail on the head. The World has way to much capacity in production and with China and India coming online with auto manufactures, the money loosing dead wood needs to be trimmed.

Does Opel really need to be around in 10 years from now with Global names like Chevy, Buick and Cadillac?

GM needs to only look to their old past to see that it is time to trim this label and focus all their resources on building up their strongest options. Roll the opel product into the Chevy lineup and simplify and grow their strongest brands.

[ZL-1]

True, this is a company trying to play the stock market like any other stock manipulating company. But they do truly hit the nail on the head. The World has way to much capacity in production and with China and India coming online with auto manufactures, the money loosing dead wood needs to be trimmed.

Does Opel really need to be around in 10 years from now with Global names like Chevy, Buick and Cadillac?

GM needs to only look to their old past to see that it is time to trim this label and focus all their resources on building up their strongest options. Roll the opel product into the Chevy lineup and simplify and grow their strongest brands.

Buick's not global (US; China; Israel, as far as I remember) and only outlived Pontiac because China likes the Buick badge. Replacing Opel with Buick would not net any sales gain (one also has to consider the Engineering Center in Rüselheim, as it is a damn good one). Also, calling Cadillac global is quite a stretch: Cadillac is virtually inexistant outside of the US and Canada, and Cadillac's sales in Europe are (to be kind to GM) pathetic for a brand with the kind of history/heritage Cadillac has.

The industrial capacity issue is the issue, but I really don't understand why GM is so bad at managing that part of the business in Europe; the plants should be (99% sure they are) flexible enough to build a Cruze together with an Astra or an Aveo/Sonic together with a Corsa. If VW can manage this with its brand portfolio, why can't GM?

[Robert Hall]

The industrial capacity issue is the issue, but I really don't understand why GM is so bad at managing that part of the business in Europe; the plants should be (99% sure they are) flexible enough to build a Cruze together with an Astra or an Aveo/Sonic together with a Corsa. If VW can manage this with its brand portfolio, why can't GM?

Maybe GM's European plants are old and antiquated and they've invested enough to make them flexible? Don't know..

[ZL-1]

Maybe GM's European plants are old and antiquated and they've invested enough to make them flexible? Don't know..

Rüsselheim, at least, is AFAIK a USD 600 million dollar modern (close to new) plant. Zaragoza, spain is apparently regarded as being quite cost-competitive. The others, IDK anything about their flexibility or cost-effectiveness. But the key for GME (and not Adam Opel AG - GM has to start managing Adam Opel AG as part of GME one and for all) is the overcapacity, the costs associated with that overcapacity, and perhaps GM's cost/management accounting system that isn't producing good decision-making data/information.