GM working on a plan to make Opel profitable again

Article by Christian Andrei, on June 15, 2011

It’s no secret that General Motors is no pushover in the auto industry but what could be considered as one of its weaknesses is its European Opel unit. Chief Executive Daniel Akerson has the difficult task of turning this brand around.

Sources say that Opel has faced short-term financing problems at the parent company, preventing the brand from returning to profitability. Europe is growing slowly but Opel remains to be a high-cost brand in a very competitive segment.

Workers have already started to speculate that Opel will be sold or there might be labor concessions. Analysts and experts say that it won’t be easy to sell it off or make it have profitable growth again. An insider said that GM is “frustrated” with Opel and has been considering it as a “challenge” for many years.

Another source said that Europe itself is hard with its numerous structural hurdles in the auto sector, which is linked to cultural, media, political aspects that make it difficult to make significant changes.

He added that the problem with this is that Opel needs big changes so that its issues could be solved. Akerson, who has a background in private equity, is faced with the task of operating a big industrial company that’s being closely watched.

Complicating matters is the fact that GM is under political pressure not to implement layoffs or plant closures. It’s also facing some resistance to extend Opel’s geographical coverage due to worries that the brand is highly regional and would draw market share away from the other GM brands.

Topics: gm, opel, profit

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