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.

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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.

20 Febrero 2017



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.

Best vs. biggest

None of GM's recent cutbacks was as significant to its bottom line and global market share as selling Opel would be. The automaker confirmed last week that it was talking with PSA Group about options for Opel while cautioning that a deal was not certain.

"A sale of GM Europe would represent the next logical step in GM's strategy to be the best rather than the biggest, properly focused on return on capital and return of capital," J.P. Morgan analyst Ryan Brinkman wrote in a note to clients last week.

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.

This time around, GM's interest in a sale appears to be less about monetizing a profit-sapping asset than a determination that Europe promises, at best, mediocre returns on significant investment. Had the Magna deal gone through, GM planned to remain in Europe with a big expansion of Chevrolet that it later gave up on, so giving up Opel and sister brand Vauxhall today would be a far more significant step, effectively amounting to an exit from the market.

GM cut its losses in Europe by two-thirds in 2016 and had said it could break even there as soon as 2018. But amid costly emissions regulations and fallout from the United Kingdom voting last year to leave the European Union, executives see profitability in the region as becoming only more challenging, a person briefed on the discussions told Automotive News.

"Making sustainable returns is going to be very difficult indeed for Opel," LMC Automotive said in an analysis of the potential sale. "After persisting in these efforts over a significant period of time, the conclusion has clearly been drawn that Europe will not be profitable for GM and the argument for Europe's continued inclusion in the global operation must be from a nonfinancial viewpoint."

Barra, who flew to Germany to win support from GM's unions and government officials, assured employees that selling Opel would be good for GM's future growth plans, shareholder value and the longevity of Opel's German operations, Bloomberg reported. Germany's economy minister told reporters that GM and PSA executives had given indications that a sale would go through.

There are some downsides for GM. Perhaps most notably, the company relies on Opel for a significant amount of product-development activity, and it's unclear how that would be affected.

The division accounted for 12 percent of GM's automotive revenue in 2016, and the loss of more than 1 million annual sales would mean a hit to GM's economies of scale. It also would drop GM from third place globally to fourth, behind the Renault-Nissan-Mitsubishi alliance.

John Murphy, an analyst with Bank of America Merrill Lynch, said a sale would be a "strategic misstep" for GM.

"Profitability in other regions would likely be hindered in our view," Murphy wrote in a report last week. "In addition, we view the European business as critical for GM to maintain its status as a player on the global auto stage, especially as its two larger competitors [VW, Toyota] manufacture/sell 10 million units on an annual basis, across all global regions. As such, we believe the industrial logic for the outright exit of its European business would not make sense in the long run for GM."

Abandoning Europe would be unprecedented for a major automaker. The region has periodically offered a vital counterweight amid downturns in North America -- providing a bright spot for Ford Motor Co. as the U.S. spiraled into recession and a lifeline for Chrysler Group in the form of a Fiat takeover. During earlier times of trouble for GM, Opel was a source of stability and leadership.

Given those successes, GM entertained grand visions of expanding Opel into Asia and other markets that ultimately turned sour. With economic turmoil and intensifying competition in Europe came a torrent of red ink that forced GM into a seemingly endless cycle of plant closings, retrenchments and reorganizations.

Finally, just as GM was on the cusp of a profit, the so-called Brexit vote dashed hopes of a break-even 2016 -- while also giving executives an impetus to simply look for a clean break instead.

"Where the fish are'

Even on the heels of a record $12 billion profit in North America, GM appears determined to take nothing for granted. It's aggressively seeking ways to cut costs and improve efficiency, while also investing billions of dollars into the emerging fields of self-driving vehicles and mobility services, not to mention the demands imposed by rising fuel-economy standards and the fragmentation of the U.S. and Chinese markets.

A slide that Ammann showed Jan. 10 during a presentation at Deutsche Bank's annual automotive conference depicted GM putting an additional $2 billion into high-margin franchises, advanced technologies and manufacturing efficiency while recouping the same amount from unprofitable markets, declining segments and "footprint optimization."

It's that last category under which an exit from Europe would fall.

"What we are trying to do is fish where the fish are, or do business where the money is," Ammann said in the speech. "We will continue to be ruthless in our decisions to not pursue lines of business or markets or opportunities that we don't think can make a compelling return for us down the road."

Fuente: Automotive News


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