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GM confirms holding talks to sell Opel to the PSA Group

It looks like Opel/Vauxhall will have a new owner soon. This comes as the PSA Group and General Motors are currently holding talks over the possibility of GM selling its Opel unit to the French carmaker.

The discussions were first reported by Reuters and Bloomberg News, citing sources. In a recent statement, GM confirmed that the two carmakers are exploring several strategic initiatives with the objective of improving profitability as well as operational efficiency. GM added that the discussions included a potential acquisition of Opel Vauxhall by the PSA Group. GM also noted that the carmakers have been in alliance since 2012, with the partnership covering three projects in Europe.

Selling Opel to the PSA Group wouldn’t be an easy thing to do for GM. There are quite a number of financial, industrial and political considerations that needed to be factored in. That said, both GM and PSA could also earn some benefits from such transaction.

Read the entire article GM confirms holding talks to sell Opel to the PSA Group

General Motors to pull Opel out from Russia

General Motors has unveiled its strategy to offset the effects of the current crisis in Russia to its operations in the country. Its Opel division will exit Russia, shutting down its site in St. Petersburg by the end of 2015. Likewise, Chevrolet will scale back its presence in Russia, selling only “iconic” US-made models like the Corvette, Camaro and Tahoe.

GM will concentrate on selling premium Chevrolet and Cadillac vehicles in Russia. GM president Dan Ammann said in a statement that the change is part of the carmaker’s global strategy to ensure long-term sustainability in markets where it operates. He said that the decision avoids significant investment into a market that has “very challenging” long-term prospects.

Opel Group chief executive Karl-Thomas Neumann remarked they still expect a return to profitability next year and will stick to its long-term goals as defined in its DRIVE!2022 strategy. The carmaker expects to record up to around $600 million in net special charges -- including sales incentives, dealer restructuring, contract cancellations and severance-related costs -- primarily in the first quarter of 2015.

Read the entire article General Motors to pull Opel out from Russia

GM says most Chevy dealers in Europe now selling only Opels

General Motors is seeing its transformation in Europe getting completed on a good pace, as most of its dealers who used to carry Chevrolet vehicles are now selling only Opel-branded units. GM pulled out Chevrolet in Europe in 2014 to focus on building up its Opel/Vauxhall units.

The decision was lauded as it brought to an end a rivalry between two brands that had cannibalized each other’s sales while rendering them less profitable. Michael Lohscheller, Opel’s chief financial officer, remarked that the dealer transition from Chevrolet to Opel is working well, with 85 percent have converted to selling only Opel.

He said that in the past, a customer visits a dealership looking for an Opel but buying with a Chevrolet. He added that Opel will be developing a range of models aimed at former customers of Chevrolet.

Read the entire article GM says most Chevy dealers in Europe now selling only Opels

Opel to focus on smaller cars with more techs from parent GM

Opel is targeting to return to profit and hike its market share in Europe by concentrating on smaller cars that features more components from General Motors, according to chief executive Karl-Thomas Neumann said. Opel-Vauxhall targets to become the second largest carmaker in Europe by 2022, aiming to hike its market share in the region to 8 percent.

That goal should be reached by introducing 27 new models and 17 new engines between 2014 and 2018 – all featuring more technologies from parent GM. Neumann remarked that Opel needs to use a global platform to be really profitable, since such will pave way to achieving economies of scale in the auto business.

Opel and its profits has been hurt by management disruption, lack of small car offerings as well as the conflict between GM's goal of global economies of scale and Opel's stress on catering to the local market. In April 2013, GM vowed a EUR4-billion ($5.2 billion) investment in Opel by the end of 2016 to support the development of new cars – as part of its bid to connect the Opel and Buick product ranges to share development costs.

Read the entire article Opel to focus on smaller cars with more techs from parent GM

General Motors Co. will invest EUR250 million ($342 million) to expand its Opel diesel-engine site in Tychy, Poland. GM will upgrade the 530-employee strong Tychy site to get it ready for the production of a new 1.6-liter four-cylinder diesel engine in 2017 for vehicles produced by Opel and Vauxhall, the US carmaker said in a statement.

GM is trying to end by mid-decade its European losses that have reached over $18 billion since 1999. Opel is investing EUR4 billion in the four years through 2016 to develop 23 vehicles and 13 engines. "The new mid-sized diesel engine family is an important part of our engine offensive," Peter Thom, head of manufacturing at Opel, said in the statement.

"We appreciate the good quality and high efficiency of our Polish location and look forward to implementing this exciting project." The Tychy site expansion is "supported" by the Polish Ministry of Economy, GM remarked, allowing it to have annual capacity of 200,000 engines in the near future.

Read the entire article GM to invest EUR250 million to expand Opel’s Tychy site in Poland

Outgoing General Motors chief executive Dan Akerson is "optimistic" about Opel, its struggling European brand. Opel's market share surged in Europe for the first time in 14 years in 2013, Akerson said during a question-and-answer session at the Automotive News World Congress. GM President Dan Amman told the Congress that Opel was in its best shape after a long time, but is cautious that Europe remains a "very, very fragile" economy.

Ammann called 2014 as a "transition year" for GM's operations in Europe. Opel is expecting a modest increase in sales volume and market share in 2014. The European brand will launch a redesigned Corsa subcompact late in the year, to be followed by a redesigned Astra compact in early 2015 as well as by new families of gasoline and diesel engines.

Opel and its UK sister brand Vauxhall dropped 1.4 percent to 781,177 units in western Europe in 2013 in a market that fell down 2 percent, according to industry association ACEA. This gave the unit a 6.8 percent market share. In the wider EU and EFTA market, Opel/Vauxhall's share remains stable at 6.7 percent as it saw its auto sales drop 1.5 percent.

Read the entire article Outgoing GM CEO is optimistic about Opel’s future

General Motors may be able to post a turnaround in Europe, not due to its partnership with PSA/Peugeot Citroen, but due to its product offerings in the region. The US carmaker has already lost over $18 billion in Europe over the past 13 years. That confidence for a turnaround is based on GM’s current program to overhaul and consolidate its global vehicle platforms, according to GM executives and suppliers familiar with the carmaker’s plans.

The program will allow GM to develop and build almost all future Opel vehicles on its own. PSA recently disclosed that the carmakers were scaling back an alliance announced in early 2012, with GM possibly withdrawing from a program to build its next-generation Opel Corsa on a shared PSA platform. GM, however, said that the planned replacements for Opel Meriva and Zafira due in 2017 would remain on jointly developed PSA platforms.

Guggenheim Securities analyst Matthew Stover remarked that PSA-GM alliance was "a head-scratcher," and “made no sense” for the US carmaker. In September, GM executives privately confirmed that a substantially revamped Corsa would be launched in Europe in late 2014.

Read the entire article GM to develop and build most future Opel products on its own

General Motors chief executive Dan Akerson has set a number of elaborate goals to achieve in the mid-decade -- trimming the carmaker’s losses in Europe, increasing profits margins in North America and improving sales in China – and he expects Opel and Buick to hold the key for achieving these ambitious targets.

Right now, GM is overhauling its operations in Europe that includes Opel and Vauxhall – shutting down an assembly site, trimming costs and introducing new models like the Mokka. GM is now leveraging Opel and Buick, a thing it has done in the past. The Buick Regal compact sedan is being sold as the Opel Insignia in Europe, with some minor differences.

The Opel Mokka is being sold in the US as the Buick Encore. According to Jim Federico, a GM executive director in product development, the Mokka and Encore are almost 90 percent the same, and share more components than the Regal and Insignia. This means that Buick and Opel are offering similar if not identical vehicles, suited to regional tastes.

Read the entire article GM CEO says Buick and Opel key to achieving mid-decade goals

General Motors Co. reaffirmed a plan to position Opel as a more expensive brand in Europe and to create room for Chevrolet as its value offering. The plan was reaffirmed by Alan Batey, Chevrolet's new global chief, as the carmaker launches newer vehicles at Opel and sister brand Vauxhall with an aim to better GM's dire financial situation in Europe.

Batey said that they plan to build on the early strong demand for the Mokka small sports utility vehicles and the Adam minicar. Success of the Opel and Vauxhall brand will enable GM create space for Chevrolet to operate in Europe. Following a question as to how GM will differentiate Opel and Chevrolet in Europe, Batey replied that they need to rebuild the Opel brand.

He said that will provide GM with an opportunity to move Opel and Vauxhall "up a little bit," creating a "value opportunity" for Chevrolet." He noted that they have to make sure that there is a "little overlap as possible" between Opel and Chevrolet in Europe. Batey called Opel the mainstream brand in Europe and Chevrolet as the value play.

Read the entire article GM to make Opel a premium brand in Europe and create room for Chevrolet

General Motors’ Opel and Buick brands will be more intertwined as the carmaker tries to bring their product development teams much closer, GM chief executive Dan Akerson remarked at an investor conference last week. GM’s CEO remarked that bringing the brands’ product development teams much closer will result to “all sorts of synergies” between Opel-Vauxhall and Buick.

GM is seeking to squeeze all it could from its costly engineering resources in Germany, where Opel is based. Opel started filling out Buick's lineup after the 2009 collapse of Saturn, which had sold rebadged Opels in its final years. Buick is set to get some Opel-derived models to sell in the United States and China. Buick first started to rebadge Opel vehicles a few years ago, when it started selling the 2011 Regal, which is based on the Opel Insignia, in the US.

Most of Buick’s lineup in the US contains Opel’s European flavor. For instance, the Verano sedan that was rolled out in late 2011, is the US version of the Opel Astra. Likewise, the Encore small crossovers are Opel Mokkas that migrated to the US. The Regal, Verano and Encore also have their own versions in China.

Read the entire article GM to boost Opel-Buick connection for cost synergy

General Motors Co. will commence building the Chevrolet Cruze at its Opel’s Gliwice site in Poland at the end of 2014, German daily Frankfurter Allgemeine Zeitung reported, citing an internal production plan as the source of the information. A spokesman for Chevrolet Europe, however, denied the report, saying that there is yet no decision as to where the next-generation Cruze will be produced.

GM has disclosed that it would shift output of the next-generation Cruze out of South Korea, where the current model is being produced. Reuters reported in January 2012 that GM’s management and workforce were discussing wether to transfer production of the Cruze from South Korea to Poland to lower losses at Opel. South Korean unions welcomed the news negatively and threatened to "wage a war."

The Gliwice site could be a good site to produce Chevrolet’s products since it is the only low-cost Opel plant in Europe. It also produces the Cruze sibling, the Opel Astra. Both models could be produced on one assembly line that would require only a little additional investment. The Cruze is Chevrolet's best-selling model in Europe, with sales up 5 percent to 12,441 units in the first four months of 2012, according to data from JATO Dynamics.

Read the entire article GM to build Chevrolet Cruze at Opel site in Poland, says report

GM Financial Company Inc. has launched its new Opel Financial Services brand, after buying back European and other international operations of Ally Financial. With its German banking license – held by Ally -- back in-house, GM unit Opel/Vauxhall now hopes to offer cheaper loans and leasing deals. With an in-house service helping provide auto financing, Opel is expecting that the proportion of cars sold using financing to exceed the current level of 40 percent.

Meanwhile, rival carmakers could sell up to 50 percent of their vehicles through financing offers. According to Opel Chief Financial Officer Michael Lohscheller, Opel Financial Services will offer more attractive financing deals, including zero interest rates with no down payment.

He remarked that the launch of Opel Financial Services was a very important step for the brand and its product offensive, noting that the carmaker was not always in a position to make the best financing offer as it does not have its own bank like its rivals.

Read the entire article GM Financial launches Opel Financial Services brand in Europe

General Motors said last Thursday that its first-quarter pretax loss in Europe decreased to $175 million from $294 million the previous year. This prompted analysts to state that while GM is making advancements in its plan to restructure its struggling Opel/Vauxhall unit in Europe, it still has much to do. GM is outperforming Ford Motor Co., which reported that its pretax operating loss in Europe for the quarter steeply grew to $462 million from $149 million the prior year.

GM was able to reduce costs in Europe by $300 million. As a result, the prices of its models were not changed. The figures in Europe imply that GM's cost cuts are beginning to offset the decreasing sales throughout the industry, which are nearing its lowest levels for the past 20 years. Chief Financial Officer Dan Ammann told reporters that the results in the first quarter are the result of the implementation of its plan for Europe.

Ammann said that GM is staying with its target of breaking even in Europe by the middle of the decade. However, he said that there are no signs that the region is facing a quick turnaround. He said that at this point, it’s too early to declare that Europe has hit bottom. He said that there are some things that the company is unable to control.

Read the entire article GM making progress in restructuring its money-losing Opel/Vauxhall unit in Europe

General Motors Co.’s commitment to Opel, its struggling division in Europe, has not waned. In fact, GM will be investing 4 billion euros ($5.2 billion) in Opel by the end of 2016 to fund the launch of new models. In a statement, GM CEO Dan Akerson said that as a global automotive firm, GM requires a strong presence in Europe, when it comes to production, sales, design and development.

He referred to Opel as “key” to its success. He also said that parent company GM continues to give Opel its full support. GM’s board is set to have its quarterly meeting this week at the headquarters of GM in Ruesselsheim, near Frankfurt. Since 1999, Opel’s operations in Europe have posted losses of $18 billion (which include a loss of $1.8 billion in 2012).

New models are being offered by Opel and UK sister brand Vauxhall in hopes of raising its sales. These new models include the Adam minicar, Mokka SUV and Cascada convertible. Opel said that it is slated to launch 23 new or refreshed models and 13 new powertrains by 2016.

Read the entire article GM will invest 4 billion euros in Opel by the end of 2016

General Motors Co. has reached an agreement with labor leaders to guarantee the jobs of over 20,000 German workers at its Opel unit in exchange for the shutdown of its Bochum site and a freeze in wages. Unions agreed to let GM close down its Bochum site by the end of 2016. The site employs around 3,300 people and builds the Zafira minivan.

Wage increases, which were put on hold in November 2012 as part of the negotiation process, will be postponed through 2015. In return, GM will refrain from large-scale job cuts until 2016, instead of the initial target year of 2014.

When GM halts vehicle production at the Bochum site by end of 2016, GM will keep part of the plant as a components and logistics center, and will continue to employ 1,200 people at the location.

Read the entire article GM and Opel unions reach deal on closure of Bochum site, frozen wages

German trade union IG Metall demands that General Motors guarantee that no employee of its Opel unit working at the Bochum plant in Germany will become unemployed after production ends. This implies that IG Metall may accept a possible closure of Opel’s Bochum plant. The union said they must guarantee that no one will be unemployed once the production of the current vehicle in the plant ends to ensure that workers will not be alone in carrying the risks of restructuring the site.

The union demands security for the employees until the end of 2018. The union acknowledged that Opel’s current economic situation is worse than ever before, and that it has “reached a dimension that threatens its existence.” IG Metall admitted that due to a low market share, production sites in Europe are utilized only to 50 percent.

The union warned that no German Opel plant was safe, since the weakest site would be “weeded out.” IG Metall said that while initially workers in the Bochum plant are most affected, no one is secure in the mid-term, adding that no plant could ensure a sufficient utilization of its production capacity even for the mid-term. Rainer Einenkel, Bochum's works council chief, told Reuters that he would not oppose union demands that tacitly agree to the plant’s closure. He disclosed that the majority was in favor of the shutdown of the plant.

Read the entire article IG Metall wants GM to secure Opel jobs until end of 2018

German trade union IG Metall will refuse demands by the General Motors’ management to freeze the wages of Opel’s workers in Germany as long as the unit incurs losses, according to a statement published by the German works council at the company. IG Metall claims that the wage freeze would enable Opel to not fulfill the industry-wide wage hike in Germany on a sustained basis.

IG Metall added in the statement that the wage freeze would effectively make Opel no longer a part of the industry-wide wage structure. GM is intensifying cost-reduction pressure on Opel and has threatened to shut down a German plant two years earlier than planned.

Media outlets obtained a letter of GM Vice Chairman Stephen Girsky to Opel employees, saying that the US carmaker is willing to provide financial support to its loss-making European unit if its German operations are set up competitively and profitably.

Read the entire article IG Metall set to refuse GM’s demand to freeze Opel workers’ wages

General Motors Co. has pledged to hold onto its gradual approach to Opel restructuring despite doubts over its feasibility as well as signs of increasing pressure from the French government for a partnership with PSA/Peugeot-Citroen. GM has vowed to break even in Europe by 2015 and close a factory in Germany by 2017.

However, there remain doubts over whether GM’s plans for Opel -- which include the roll out of 23 new models over five years – are sufficient to preserve the unit’s current market share and reverse losses that may amount to at least $1.5 billion for 2012. Morgan Stanley analyst Adam Jonas said that the Opel’s stable share is “way too bullish."

Jonas suggested in 2012 that GM should sell Opel, expecting the unit to fail to meet its break-even goal. He added that revenue assumptions behind Opel’s restructuring don't allow for enough further degradation in the market or Opel's business. "Everyone's doing new product," Jonas remarked.

Read the entire article GM commits to sticking with restructuring plan for Opel

The supposedly incoming design chief for Opel/Vauxhall will no longer fill the post as he has left parent company General Motors Co. for good. GM had appointed Dave Lyon to replace current Opel design chief Mark Adams on August 1, 2012. The carmaker has named Adams as the new global design director for Cadillac and Buick.

A spokesman for Opel confirmed Lyon’s exit, but declined to specify the reason for the move. Due to the situation, Adams will remain as the design boss for Opel until GM finds a suitable successor, the Opel spokesman told Automotive New Europe. Adams will still become new global design director for Cadillac and Buick. 

Lyon’s sudden exit from GM underscores the management turmoil at Opel as the European unit tries hard to restructure its operations to return to profit amid the dwindling demand for vehicles in the continent. Karl-Friedrich Stracke earlier this month resigned as chief executive for Opel, and was temporarily replaced by management board member Thomas Sedran.

Read the entire article Dave Lyon unexpectedly leaves GM days before Opel assignment

General Motors Co. has entered a deal to move the biggest portion of its European logistics operations to a unit of PSA/Peugeot-Citroen, its alliance partner. In a joint statement last Monday, the two companies said that by next year, the transfer to PSA's Gefco unit will start. As a result, GM is able to focus on its core car business.

Vice Chairman Stephen Girsky said that this is the initial step in leveraging synergies from the wide-ranging alliance with PSA/Peugeot-Citroen. He added that this logistics deal will pave the way for GM to achieve efficiency improvements and cost savings.

The Gefco unit of PSA will manage the logistics for GM's European brands Opel and Vauxhall. It will also do the same for its global brands, Chevrolet and Cadillac, including in Russia. It would be tasked to supply the materials and parts that will be used in GM's manufacturing plants and parts distribution centers in Europe. It also has to handle the transport of vehicles from the plants to dealerships.

Read the entire article Gefco will handle the European logistics for GM’s European brands Opel, Vauxhall