Sep 24, 2020
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GM Europe’s Opel-Vauxhall Expected To Make Money At Last

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Opel-Vauxhall Adam Chronic loss-maker General Motors Europe will finally start creating wealth next year as a result of cost cutting and restructuring but sales will remain stagnant through the rest of the decade. That s the realization of a report from Morgan Stanley. Morgan Stanley has also raised its estimate of the cost of GM Europe by $4

 

5 billion although that s not as good as it sounds. The investment bank now reckons the company comprising mainly German-based Opel and British brand Vauxhall is worth a negative $11. 5 billion compared with its previous estimate of a negative $16 billion. Opel-Vauxhall has been a serial value-muncher. It lost $1. 8 billion in 2012 and has notched up a scarcely credible $18 billion in red ink since 1999

 

Morgan Stanley now believes it will lose $837 million in 2013. GM Europe has said it will break-even by mid-decade and Morgan Stanley analyst Adam Jonas now believes that’s heading in the right direction just. We estimate GM Europe will generate $0. 4 billion of combined profit over the next four years

 

We’ve improved our forecast for losses at GME further to $260 million in 2014 versus our estimate of $837 million in 2013 with a favorable margin of one per cent for 2015 and 2016 Jonas said in the report. PROMOTED Civic Nation BRANDVOICE | Paid Program
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We forecast Opel s revenues to stagnate from roughly $20. 1 billion in 2013 to $20. 4 billion by 2017 on a backdrop of a shallow European recession. From this point we grow Opel revenue at between one and 1. 5 per cent through 2021 Jonas said. Last month GM Europe announced it might withdraw its Chevrolet brand in 2015 from Europe

 

Jonas said dumping Chevrolet will cost $900 million but can have a four-year payback adding more than one percentage point to pre-tax margins. News of the promotion of Mary Barra last month to GM CEO brought about speculation that the long-term plan to retain and turnaround Opel-Vauxhall might yet be dumped

 

While news broke of Barra s appointment it was announced that Opel-Vauxhall supporter Steve Girsky was leaving his job as GM vice-chairman. Morgan Stanley s Jonas had argued that it might be better for GM to shut-down Opel-Vauxhall and cut its losses. GM was close to pulling out in 2009 but it spiked a deal to sell Opel to Magna International in a package engineered by the German government

 

We believe GM s opportunity to extricate itself from Opel has passed at least for this cycle Jonas said in the report. Opel is declared to have a strong role to play in providing engineering and design for GM s global small and medium-sized cars and diesel engines. Any thoughts GM might seek closer ties with Peugeot-Citroen of France died with news last month it sold its seven per cent stake

 

But collaboration agreements still survive. GM Europe has been restructuring and has announced the closure of one plant in Bochum Germany. Earlier this year it announced a $5. 25 billion investment plan through 2016 to develop 23 vehicles and 13 engines. In 2012 Opel-Vauxhall sold 794 000 cars in Western Europe for a market share of 6

 

7 percent in step with Automotive Industry Data. This market share was maintained in 2013 and can increase slightly in 2014 AID said. AID said Opel-Vauxhall new products like the little Adam city car and the revamped Insignia sold in the U. S. as the Buick Regal would bolster sales

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