Barra's move to sell Opel signals deeper change at GM
February 14, 2017 @ 6:10 pm
Reuters via AutoNews.com
DETROIT -- General Motors CEO Mary Barra’s decision to put the company’s European operations on the block marks a turning point for the automaker that once prided itself on being the No. 1 vehicle maker in the world.
If Barra succeeds in concluding a deal with French automaker Peugeot SA -- and people familiar with the discussions cautioned on Tuesday that many details are yet to be settled -- she will have delivered in an unexpected way on her promise to have GM “disrupt ourselves” rather than wait to be jolted by outside forces.
Selling Opel will mean GM no longer seeks to be a key player in all the major auto markets, but rather is focusing on cash flow and profitability instead of sales volume.
Bob Lutz, former GM Vice Chairman and head of product development, said on Tuesday GM could structure a deal with PSA that would still allow for joint product development, and could leave open the possibility of exporting certain Cadillac or Chevrolet models to Europe.
“The proceeds from the sale (which would do wonders for the stock price) would permit acceleration of the business in North America and China; a far better use of resources,” Lutz said in an email, adding he had not been in contact with anyone at GM.CONTINUE AT LINK ABOVESelling Opel would mean GM is setting aside those traditional measures of success to be a smaller company focused on the United States truck market, China and some -- but not all -- the large, growth markets in Latin America and Asia. Under Barra’s leadership, GM has exited Russia and Indonesia after concluding it couldn’t earn acceptable returns on investment.
Barra has made return on invested capital, cash flow available for share buybacks and profitability the key measures of GM’s success, not sales volume.