There were some strange goings on with Opel/Vauxhall in the media last week. Reports in Germany suggested that GM might be considering selling its financially challenged European division, leaving it to press on with developing the Chevrolet brand.
I doubt this is seriously being considered, but the story is not completely nuts and the follow-on media discussion is inevitable given recent history.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Let’s be clear – this story could be way off the mark, but it’s out there being talked about and can’t be ignored. And let’s face it, stranger things have happened in this industry. There are a number of possibilities in terms of such a story’s emergence. It could be innocent in its origins (things said or presented at meetings are subject to ‘Chinese whispers’, exaggeration, misunderstanding once they leak out to the press); it could be the dark art of PR or politics at work (let’s get that idea out there publicly and it will help us with X, says a Machiavellian manager); or – and we can’t rule this out entirely – there could be more than a grain of truth in it (or someone wants to scope for potential buyers, see what the real level of interest might be).
There is certainly some frustration in the US with the situation for long loss-making GM in Europe. After the pain that has been taken to restructure in North America, the lack of serious restructuring in Europe has not gone unnoticed. But to sell the unit outright would come with major complications and upset the upbeat strategic vision for GM that has been outlined by its managers since emergence from Chapter 11. Giving up on fixing Opel would mean losing an important global engineering centre. And would Chevrolet fill the gap in sales? No.
It’s hard to see how it would not be a backward step. There was a plan to sell Opel a few years ago when GM was on the brink, but GM was able to yank the iron from the fire at the last minute and claim that it didn’t need to sell Opel after all. Moreover, GM said that if it didn’t have to sell Opel, it shouldn’t. That business logic is surely not now redundant and a resurgent GM doesn’t have to sell Opel for financial reasons. If you are fixing something (GM Europe actually achieved breakeven in Q1) why cast aside all that hard work and let someone else get the benefit?
But there is frustration with the difficult situation in Europe. And, if you’ll recall, there was some heavy politics involved when many in Germany (Opel’s manufacturing centre of gravity is very much in Germany) were mightily miffed that GM had decided not to sell the operations to Magna. That deal, it appeared, was popular in Germany and struck under what appeared to be an ‘understanding’ of just how far industrial restructuring would extend in Germany. Other plants/employees in other countries looked much more vulnerable. That proposed sale eventually unravelled as the EU competition people belatedly took an interest and GM decided Opel was actually worth hanging on to, strategically. It just needed to be restructured further to get it back in profit.
So, what has happened since? New GM is back in the black and GM is closer to making money in Europe. The Antwerp plant has been shut. Luton was saved when it got the next Vivaro van. Ellesmere Port is likely to get the Ampera as well as Astra. And just recently, 1,800 job cuts at Bochum (Germany) have been announced. Things might have been a little different under that Magna ownership scenario.
It’s not yet clear how many enforced redundancies may be necessary at Bochum to hit that 1,800 figure. The German economy is performing very well, so maybe there will be enough alternative options to attract volunteers, but if there are not enough, some industrial relations conflict is perhaps not out of the question. Things got pretty heated not so long ago.
Opel’s boss, Karl Streike, has dismissed the reports of an Opel sale as ‘speculation’. However, at the time of writing, a categorical rebuttal from GM HQ alongside a clear commitment to Opel as a vital part of GM’s long-term industrial strategy appears to be absent.
German Chancellor Mrs Merkel may be getting a little exasperated with Opel’s masters in the US once again. Maybe it’s all innocent, but if GM’s managers figure that the sale speculation (including apparent Chinese interest) can’t do any harm given the Bochum situation, they are perhaps playing a dangerous game. The lack of commitment will rekindle those bad memories of a few years ago and won’t be a positive thing for plant employees, dealers or indeed customers. After a few days of stewing, a little clarity is called for.
