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The really new GM: Ready to quit Europe

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#1 · (Edited)
http://www.autonews.com/article/20170220/OEM/302209929/the-really-new-gm-ready-to-quit-europe


Opel sale would be a bold step, but is it the right move?

February 20, 2017 @ 12:01 am
Nick Bunkley

DETROIT -- After nearly two decades of losses in Europe, General Motors appears ready to all but abandon the continent in order to seek bigger payoffs with investments in autonomous vehicles and the more lucrative U.S. market instead.

It's a radical pivot for a company that historically tried to dominate every global market it could as well as a sign of how dramatically the industry is being upended by shifting attitudes about transportation.

GM has been in this spot before. But both the company and its circumstances are significantly different now. A 2009 deal to sell the Opel division -- born of desperation and ultimately canceled -- envisioned GM ultimately finding a way back in Europe through its surviving brands.

Today's GM works from a position of financial strength but with far less patience or sentimentality. Under CEO Mary Barra and President Dan Ammann, GM is proving that it's increasingly willing to walk away from declining segments and unprofitable markets -- even one as sprawling and influential as Europe -- so that it can pour more of its finite resources into advanced technology, high-margin SUVs, Cadillac and promising new revenue streams.



"In order to fund that, we need to go and find the money somewhere else. And we need to decide what we're not going to do," Ammann told analysts and investors during a presentation last month. "We don't need to play in every place. So we may not invest in certain markets or places going forward. The important message here is the mindset."

GM already has shown that discipline by ending or limiting operations in Russia, Australia, Indonesia and Thailand. It's also reconsidering investments in India and Brazil.

The strategy has helped the automaker nearly double its return on invested capital, from 15.4 percent in 2014, Barra's first year as CEO, to 28.9 percent last year. Automakers' historically poor returns on invested capital were at the heart of Fiat Chrysler Automobiles CEO Sergio Marchionne's 2015 call for industry consolidation, and improving that metric can help keep GM in control of its own destiny.

There are certain periods in running a big conglomerate like GM - that the CEO needs to think and act boldly and this is one of them.

There are going to be major upheavals forthcoming in the auto industry w/ automation and increased movement to non-traditional ICE powertrains, and in particular, diesels increasingly falling out of favor.

Sure, selling off Opel/Vauxhall will have some repercussions, but at the same time, it injects (a likely) $1B to GM's coffers (to continue investing in the areas which look to have a higher ROI) and stops any further bleeding from the European market.

Now, this doesn't mean that GM will be shut out of the Euro market forever.

Due to public health concerns, the tide is really starting to turn against diesels in Europe (a major reason why Toyota has been seeing good growth in Europe recently) and hybrids, PHEVs and EVs are starting to gain some real steam (for instance, the Kia Niro had 25k orders last year).

GM's core technology in this area lies w/ Chevrolet (in the Voltec powertrain and the EV system in the Bolt) - in which it would not be unfeasible for GM to give it another go in Europe w/ Chevy as a brand focused on alternatives to gas/diesel only powertrains (combined w/ increased automation).

VW makes little $$ for the VW Group with most of its profits coming from Audi and Porsche.

This is where Cadillac comes in (yes, I know, many of you are rolling your eyes).

Don't know how far Cadillac has gotten in terms of developing diesel powerplants for Europe (as Cadillac had stated), but if it isn't somewhat close to completion, they should just abandon it and instead, focus on utilizing the Voltec and EV powertrains for Cadillac.

Of course, Cadillac would need the right mix of product and proper execution of said product if they were to have any chance in making inroads into the European market (same goes for Chevy), but this challenge wouldn't be any more difficult than continually trying to turn a profit with Opel/Vauxhall and what GM would be doing w/ Chevy and Cadillac is what they would be doing anyway to future-proof themselves for the NA market, as well as China and other Asian markets where GM can make inroads.
 
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#15 ·
I say "fortify" there EV/ Hybrid / Voltec line up and DROPPING loss making divisions that REQUIRE there OWN designs AND "PT solutions" (read DIESEL)

I WOULD LOVE to see a LOT of the Opel "cleaver tech" show up over here in Buicks and CHEVY models (the flex-fit bike rack the MATRIX headlight systems ETC)

REBOOT Chevy from being a LOW tech "basic" brand into a PREMIUM AMERICAN brand with HIGH TECH EV/"electrified" PT "solutions"

and CADDY "pivot" MORE to FOCUS on TECH / DESIGN / material finishes and MORE "electrified" power solutions
 
#5 · (Edited)
Same here. Europe has been a financial loser for GM for a long time, and there is nothing on the horizon which would change that. And of course the long term liabilities/debt. On the other hand, pulling out of the European market completely is a lot to wrap your head around.
 
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#9 ·
Here is a line from an article in Autonews.com today..."Under CEO Mary Barra and President Dan Ammann, GM is proving that it's increasingly willing to walk away from declining segments..."

If Camaro sales continue to languish, do you think it will be 2002 all over again anytime soon?
 
#18 ·
The really new GM: Ready to quit Europe
Opel sale would be a bold step, but is it the right move?
February 20, 2017
Nick Bunkley
AutoNews.com

DETROIT -- After nearly two decades of losses in Europe, General Motors appears ready to all but abandon the continent in order to seek bigger payoffs with investments in autonomous vehicles and the more lucrative U.S. market instead.

It's a radical pivot for a company that historically tried to dominate every global market it could as well as a sign of how dramatically the industry is being upended by shifting attitudes about transportation.

GM has been in this spot before. But both the company and its circumstances are significantly different now. A 2009 deal to sell the Opel division -- born of desperation and ultimately canceled -- envisioned GM ultimately finding a way back in Europe through its surviving brands.

CONTINUE AT LINK ABOVE
 
#19 · (Edited)
Automotive News said:
Under CEO Mary Barra and President Dan Ammann, GM is proving that it's increasingly willing to walk away from declining segments and unprofitable markets -- even one as sprawling and influential as Europe -- so that it can pour more of its finite resources into advanced technology, high-margin SUVs, Cadillac and promising new revenue streams.
And in that regard, GM's move from Europe is almost like FCA's abandonment of the 200 and Dart --- Those are resources that can be better spent (and create a better return) elsewhere.

If pulling out of Europe could mean a more profitable GM or money to sink into a resurgent Cadillac, is it worth the trade off? Many will debate either side of that argument.

Automotive News said:
"In order to fund that, we need to go and find the money somewhere else. And we need to decide what we're not going to do," Ammann told analysts and investors during a presentation last month. "We don't need to play in every place. So we may not invest in certain markets or places going forward. The important message here is the mindset."

GM already has shown that discipline by ending or limiting operations in Russia, Australia, Indonesia and Thailand. It's also reconsidering investments in India and Brazil.
This is the first I've heard of any reconsideration of Brazil; from what I've read there operations there are vast and profitable.

However, I wouldn't be surprised if GM left India. I think they make money there, but read someplace recently that they were selling one or two of their plants there to SIAC in return for a larger stake in one of their joint assets.

Automotive News said:
GM came close before to offloading Opel, an albatross that has hemorrhaged more than $20 billion since last turning a profit in 1999. But months after then-CEO Fritz Henderson struck a deal with Magna International in 2009, GM's board backed out.
Kind of surprised no one has a microphone in front of Fritz right now. He called it 7 years ago and was "ahead of his time". Does anyone care? Probably not.
 
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#45 ·
And in that regard, GM's move from Europe is almost like FCA's abandonment of the 200 and Dart --- Those are resources that can be better spent (and create a better return) elsewhere.

If pulling out of Europe could mean a more profitable GM or money to sink into a resurgent Cadillac, is it worth the trade off? Many will debate either side of that argument.


This is the first I've heard of any reconsideration of Brazil; from what I've read there operations there are vast and profitable.

However, I wouldn't be surprised if GM left India. I think they make money there, but read someplace recently that they were selling one or two of their plants there to SIAC in return for a larger stake in one of their joint assets.


Kind of surprised no one has a microphone in front of Fritz right now. He called it 7 years ago and was "ahead of his time". Does anyone care? Probably not.
There is not one good thing about this decision - Zero.

Fritz's idea was idiotic in 2009 and it is 10,000X worse in 2017.

GM has violated the trust of the entire Global Auto Market with this move and that is enough bad Karma to destroy any company.

GM is done as a viable automaker if it leaves Europe, it will never get back in as it has betrayed the trust of an entire continent and MAJOR Auto Market, next GM will be forced out of India, South America, Canada then ASEAN countries, it is already dead in Australia, there just has not been a funeral yet.

GM's competitors that have European volume to offset costs and generate revenue will push GM out of market after market, including China eventually and GM continues it's extremely poor Caddy/Chevy regional brand strategy and drops Buick and GMC, in order to dump even more cash into brands nobody wants and nobody trusts. All GM does is cut features, cut trims, cut models, cut brands, cut markets and cut some more, all the while proving beyond any doubt that it cannot be trusted by any customer in any market.

GM needs to leave California next, along with the other states that use it's emissions, why make a separate emission system?

California will not miss GM, as the only brands that sell here are Buick and GMC and GM will find a reason to drop them soon enough and California buyers will be more than happy to buy Audi, Ford, Honda, Jaguar, Land Rover, Jeep, Lexus, Lincoln, Mercedes, Nissan, Hyundai/Kia, RAM, Subaru, Tesla, Toyota and VW Cars, Trucks, SUV's and Vans when they do - good riddance. If GM is leaving 1/3 of the global market, might as well get out of 1/3 (or more) of the U.S. market.
 
#23 ·
I think GM's move away from Europe are due to mostly three things:

* Opel's financials and expected financial over the next few years
* The European political and economic rocky road over the next few years
* The competitive landscape within the European continent

Strategically speaking, GM wants to be in this market because it is so big and rich, but, not in the way that they are now. They are probably going to take their Opel investment and take it instead to invest in the remaining GM brands making products specific for the "European" market.
 
#26 ·
It might be wise for GM to re-enter Europe as an EV brand only. Seems there is a trend in Europe of banning combustion engines from city centers and some countries like Norway, Netherlands and even Sweden talking about banning them completely. They can be the first to offer all electric or hybrid vehicles and get in ahead of the curve.
 
#32 ·
It comes down to this folks: If GM sells Opel and disengages itself from Europe, it will be nearly impossible for GM to re-enter at a later date.

Why? GM has proven time and time again, that it is NOT willing to make the necessary dealership networks to make their American brands worthwhile in Europe. Opel is their ONE and ONLY chance. Period. End of story.

No. Chevrolet is not going to magically be relevant in Europe. Their entire product line is dopey.
No. Cadillac is not going to magically be relevant in Europe. Their product line is not viewed as relevant in luxury circles.
 
#33 ·
The crazy part of this is that perhaps Buick could serve as a new premium brand globally,
substitute FWD Verano, Regal and laCrosse for Buick versions of ATS, CTS and maybe CT6..

Or s that too close to those Opel and Vauxhall products that GM is trying to sell to PSA?
 
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