It surely came as no surprise to General Motors executives that their European division is once again, bleeding cash. After all, they knew that Opel and Vauxhall had already lost US$580 million in the first nine months of 2011.
However, as the Wall Street Journal reports, they weren’t prepared for the “horrendous” fourth quarter losses. Therefore, despite declaring last week that it is determined to turn around Opel, GM is now seriously reconsidering its options.
According to the report, an unnamed GM official said on Tuesday that the U.S. group is almost fed up with its European brands’ inability to make progress: “There is an increasing frustration with Opel and a feeling that the cuts two years ago did not go deep enough. If Opel is going to get fixed, it is going to get fixed now and the cuts are going to be deep.”
This surely does not bode well for the future of Opel and Vauxhall employees and their respective plants.
An IHS Automotive report that was published today goes as far as to suggest that GM might be forced to dump both brands and replace them with Chevrolet.
“Would it be beyond the scope of possibility of GM to abandon the Opel and Vauxhall brands altogether?” says the report. “Possibly, but a properly radical plan may be to just retain four or five production sites and turn them into assembly plants for Chevrolet models.”
IHS points out that Chevrolet could be repositioned in Europe “as a value, lower-mid market brand to compete alongside the likes of Hyundai, Kia and Skoda.” But if that happens, who will develop GM’s small cars? IHS has an answer for that, too: “It will retain the Russelsheim R&D facility for an enhanced global vehicle development program to create true ‘world’ cars, such as Ford is doing now.”
GM is currently engaged in discussions with the labor unions and wants to make severe cuts, lowering the brand’s break-even point since the European new car market is facing a crisis.
Among the options put on the table are the closing of Opel’s assembly plants in Bochum, Germany and Ellesmere Port, England, which employ around 3,100 and 2,100 workers respectively. Up until now, there has been no agreement and the powerful German unions will, most likely, object to this plan.
Story References: WSJ & Detnews
