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GM Europe May Shut Plants; Jettison Vauxhall, Opel

IHS says Chevrolet could replace Vauxhall’s and Opels

GM Europe might have to shut two plants or dump the Vauxhall and Opel brands and replace them with Chevrolet, according to published reports.

The Wall Street Journal Europe reported that because of big losses, GM Europe might consider closing factories in Bochum, Germany, where it employs about 3,100, and Ellesmere Port, England where it has about 2,100 workers.

GM Europe lost an-EBIT adjusted $600 million in the fourth quarter, after reporting a loss of $580 million in the first nine months of 2011.

IHS Automotive said that an unmanned GM executive had described European losses as “horrendous”, and said U.S. management is running out of patience.

In a report, IHS Automotive said GM Europe might dump the Vauxhall and Opel brands and replace them with Chevrolets.

“Would it be beyond the scope of possibility for GM to abandon the Opel and Vauxhall brands altogether? Possibly, but a properly radical plan may be just retain four or five of GM Europe’s remaining production sites and turn them into assembly plants for Chevrolet models, and then reposition Chevrolet as a value, lower-mid-market brand to compete alongside the likes of Hyundai, Kia and Skoda, while also retaining the Ruesselsheim R&D facility for an enhanced global vehicle development programme to create true “world” cars, such as Ford is now doing,” IHS Automotive said.

$11 billion lost since 1999
According to IHS, GM Europe has lost nearly $2.4 billion on Opel since 2009, while it has lost $11 billion in total since 1999.

Late last year, investment bank Morgan Stanley suggested that GM attempts to fix the losses could include reopening contract talks with labour unions. It suggested losses in 2012 could approach $1 billion.

GM has said its European operation spent $900 million on restructuring and early retirement programmes in 2011 in Spain, the U.K., Belgium and Germany affecting 5,800 people and the closure of the Antwerp assembly plant.

GM Europe’s prospects have been thrown into reverse because car sales in Europe are being undermined by the financial turmoil surrounding the possible collapse of the euro single currency zone.

Neil Winton – February 20, 2012

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