General Motors Co. suffered its 13th straight annual loss in Europe after doubling its pretax losses in the region from $747 million in 2011 to $1.8 billion in 2012. The carmaker’s figures in Europe were well in line with its October 2012 forecast. GM’s continued financial bleeding in Europe underscore the rapid decline in vehicle demand and economic conditions in the region.
GM’s total losses in Europe have amounted to $18 billion since 1999. The worsening economic situation in Europe has forced GM to take a $5.2 billion non-cash impairment on long-held assets. It also forced the carmaker to write down the value of its investment in PSA/Peugeot-Citroen by more than half to around $200 million.
While the carmaker remains positive about its new Opel models like the Mokka and the Adam, its investors were not, as evidenced by the 2.7-percent in its shares. Dan Ammann, GM chief financial officer, told Bloomberg TV Thursday that they expect further deterioration in 2013 in Europe for the auto industry.
He noted that GM “feels quite good” about the things that they control, the way they go to market as well as the cost structure of the business. He added that GM is undergoing a lot of changes. GM reaffirmed its goal of achieving breakeven in the region by mid-decade.
GM said that the move means it will slash its depreciation and amortization expenses this year by $600 million, an accounting boost not considered in its previous 2013 forecast of "slightly" better results than 2012.
Brian Johnson, an analyst with Barclays, remarked that investors should take some comfort in the fact that GM Europe’s D&A expenses in 2013 will be lower by $600 million due to the impairment of intangible assets. Johnson says that this indicates possible losses of $1.1 billion to $1.2 billion in Europe in 2013.