59662
GM hasn’t turned a profit in Europe  since 1999.
GM hasn’t turned a profit in Europe  since 1999.
  1. Economy
  2. Auto

GM Looks to Sell European Unit to PSA

  1. Economy
  2. Auto

GM Looks to Sell European Unit to PSA

General Motors had a deal to unload its money-losing European division in 2009 before backing out at the last minute, saying its prospects there had improved.
In the seven years since, Europe has drained an additional $8 billion out of GM’s coffers. After warning last week of more losses there in 2017, the automaker again is looking for a way out, today confirming talks with PSA Group that it said could lead to a sale of Opel, Automotive News reported.
“What we are trying to do is fish where the fish are, or do business where the money is,” GM President Dan Ammann told investors in January. “We will continue to be ruthless in our decisions, not pursue lines of business or markets or opportunities that we don’t think can make a compelling return for us down the road.”
GM hasn’t turned a profit in Europe since 1999. Executives previously said they hoped to break even in 2016 and that the division was on track to do just that until the United Kingdom’s surprising vote to leave the European Union in June.
GM cut its losses in Europe by two-thirds last year, but CFO Chuck Stevens said Feb. 7 that the next chance to break even would be 2018. But instead, the third-largest global automaker—which for decades sought to dominate every market it could—is continuing its transformation under CEO Mary Barra into a company dedicated to maximizing profit margins in North America and China.
The talks with PSA follow GM’s pull-out from Russia and Australia because it no longer saw those countries producing adequate returns on its investment. Meanwhile, GM earned a record $12 billion profit in North America last year.
In a statement GM said its ongoing alliance with PSA has generated “substantial synergies” for both companies.
 “Within this framework, General Motors and PSA Group regularly examine additional expansion and cooperation possibilities, as well,” the statement said. PSA Group and General Motors confirm they are exploring numerous strategic initiatives aiming at improving profitability and operational efficiency, including a potential acquisition of Opel Vauxhall by PSA.
“There can be no assurance that an agreement will be reached.”
Efraim Levy, an equity analyst with CFRA Research who rates GM shares as a “strong buy,” said GM’s exploration of a sale is “somewhat surprising,” given the reduced losses there and the fact that 11% of GM’s 2016 revenue is tied to technology linked to its European operations.
 “However, given lagging profitability there relative to US and China operations, GM may prefer to focus on larger, profitable regions,” Levy wrote. “Deeper integration or partnership is more likely in our view than an outright sale.”

Short URL : https://goo.gl/7ywwyC
  1. https://goo.gl/UtHsGb
  • https://goo.gl/2xPPnM
  • https://goo.gl/vNVJmM
  • https://goo.gl/y2039Z
  • https://goo.gl/DRuXUs

You can also read ...

Iran Khodro plans to assemble 30,000 of the 2008s in next fiscal starting on March 21.
Iran Khodro Group launched the production line of Peugeot’s 2008...
NISTC Could Undermine Suez Canal’s Importance
Iran and Azerbaijan inaugurated a short railroad in early March...
The 14.5% rise in workers’ minimum wage is one of the lowest wage growths witnessed in the last 10 years, though the economy has also experienced the lowest inflation rate in a decade.
After a 12-hour session, the Supreme Labor Council agreed to...
Iranian Lenders Hobbled by Big Bank Qualms
Iran's banking network has historically had a robust presence in...
[The burden of the government’s payment arrears to CBI lightened, posting a drop of 17 trillion rials ($450 million).
Data released by the Central Bank of Iran for the month ending...
The Law on Implementation of Article 44 of the Constitution does not allow dismissal of employees following the privatization of companies.
The remaining 323 out of 1,713 enterprises on the privatization...
CBI  Priorities  for Next Year
The Governor of the Central Bank of Iran has named bringing...
1.5b Tons of New Metal Reserves
Over 1.5 billion tons of proven metal reserves have been...

Add new comment

Read our comment policy before posting your viewpoints

Image CAPTCHA
Enter the characters shown in the image.

Trending

Googleplus