Opel could be up for sale again.
Hints that General Motors is thinking about dumping Opel are circulating again, especially in Germany, where the maker is based.
Concerns about Opel’s future were initially touched off as GM plunged into bankruptcy and came close to selling off a majority stake in the European subsidiary. Ultimately, GM decided to hold onto Opel but, earlier this week, CEO Dan Akerson declared that Chevrolet would become the carmaker’s lead global brand, a position that once was reserved for Opel.
Now, the German news magazine Der Spiegel, one of Europe’s most influential and authoritative publications, reports GM appears to be getting ready to sell Opel off again after backing out of the 2009 deal that would have turned control of the German operation over to a troika that included Magna and Russian bankers and investors.
However, Der Speigel said GM’s top management, namely Chairman and chief executive officer Akerson, are growing impatient with the lack of progress in regaining profitability. Opel has steadily lost money for the better part of a decade but the problems were always overshadowed by the larger issues looming over the parent company back in Detroit.
GM North American Operations were finally restructured when the company was forced into bankruptcy in 2009. The Chapter 11 filing gave GM a second chance to prosper in the 21st Century, Akerson told shareholders in Detroit this week. Opel, however, despite a series of restructurings, has not been able to fix what ails the subsidiary. In addition, it has become odd man out in a European Union version of auto industry musical chairs.
Sergio Marchionne, Chrysler/Fiat CEO, never hesitates to complain that the European auto industry suffers from serious overcapacity that’s never been addressed.
However, the major automakers — ranging from Renault to Fiat and Volkswagen — are protected by powerful defenders in governments across the EU. While the German metal workers union, IG Metall, has worked to defend Opel, the German federal government has spurned the maker’s request for financial assistance — though Opel did get help from various German states concerned about the impact of possible plant closings.
Opel’s grip on the German market is loosening. Market share is slipping and Opel’s showroom on Freidrichstrasse, in the heart of Berlin was shuttered recently, ostensibly for remodeling. Meanwhile, Tim Lee, GM’s top man in Asia, labeled Opel as nothing more than a “boutique” brand in China – where it is clearly overshadowed by GM’s Buick and Chevy brands, as well as locally-based Wuling.
CEO Akerson’s comments regarding the global role of Chevy and Cadillac didn’t surprise many observers who saw Chevrolet, in particular, already taking that path. But it seemed to only underscore the uncertain future of the Opel brand. (Click Here for that story.)
In April, Frank Weber, the talented engineer who guided the early development of the Chevrolet Volt, abandoned Opel for a job with BMW.
Weber has been Opel’s product planning chief since the autumn of 2009 but left with little warning. Weber’s departure highlighted concerns that there isn’t a lot of new product under development in Russelsheim right now as GM has cut costs.
In Opel’s defense, however, the German government is calling for the development of electric vehicles and GM has technology back in Detroit it could transfer to the subsidiary. The new Opel Ampera, a sporty version of the Chevrolet Volt, recently began production for European markets.
Nevertheless, the recent history of the automotive business suggests a dearth of investment in new product is tough to overcome when a struggling company is trying to turn around its fortunes.
Der Speigel suggested there are potential suitors for Opel such as Volkswagen AG, which is looking to expand and would tighten its grip on the vital German market or perhaps a Chinese company, looking for an avenue into the European market.
For GM, however, dumping Opel and money-losing operations would ease the burden on the company’s corporate treasury. But it would also be a huge strategic setback, which would eliminate the foothold in Europe GM has held in Europe since the 1930s.
GM has other subsidiaries and ventures in Europe that it could use to try to rebuild its European presence to compete against the rivals such as Volkswagen and Ford. The Chevrolet brand has become one of Europe’s fastest-growing marques. But it focuses on the lowest product niches in the market, and transforming it into a broader, more mainstream brand would be a serious challenge, several European industry analysts tell TheDetroitBureau.com
So, rebuilding GM of Europe would be a huge challenge without Opel.