GM Sells European Assets After Years of Losing Money
Deal signals General Motors is focused on profits.
General Motors has seen its future, and it doesn’t include Europe.
After losing more than $22 billion dollars there since 2000, GM is pulling out of the continent. The automaker sold its Opel/Vauxhall subsidiary and other European properties to Groupe PSA of France for $2.3 billion. The deal also includes the sale of GM Financial’s European operations. Autotrader senior analyst Michelle Krebs says the sale signals a shift in GM’s business model.
“The focus isn’t on how big (GM) is, but rather how profitable it is.” –Automotive analyst Michelle Krebs
Click here to see GM’s PowerPoint presentation on the Opel/Vauxhall sale
The sale gives GM some immediate cash to build more sport-utility vehicles and invest in more lucrative markets such as China. But leaving Europe is just part of the company’s plans. It is also moving production of the GMC Acadia SUV from its Delta Township Assembly Plant near Lansing to a factory in Spring Hill, Tennessee. That means eliminating the third shift at Delta Township, resulting in 800 layoffs. Krebs says she expects similar moves throughout the industry this year, as demand grows for trucks and declines for small cars.
“We’re going to see layoffs of workers at plants that make traditional cars, so I think we need to be prepared for that,” Krebs says.
Layoffs might not sit well with President Donald Trump, who has criticized such moves. He has also threatened to tax companies that build products in Mexico and sell them in the U.S. Krebs says while layoffs and production relocations may not be popular, they’re a fact of life for today’s auto industry.
“The automakers are trying to be very disciplined in terms of not allowing a buildup of inventory,” Krebs says. “They’re trying to balance consumer demand with supply, so they don’t get into this situation of outrageous incentives and then losing money.”
Click on the audio player to hear the conversation.
