GM Needs to Dump Opel — Analyst

Before you go, we thought you'd like these...
Before you go close icon

General Motors Co. (NYSE: GM) has lost$16 billion on its Opel/Vauxhall division in the last dozen years, and the company may lose even more in the next dozen according to an analyst at Morgan Stanley. The best course for GM to follow would be to cut its losses and sell the Opel division before the losses mount even higher.

Still, selling the division won't be cheap. Morgan Stanley's analyst puts the the cost to GM at around $13 billion, which includes restructuring costs, an equity contribution to the buyer, and GM's pension obligations to Opel. GM sees the situation differently:

"Despite the tough environment for the automotive business in Europe, we believe we have an opportunity to turn the Opel/Vauxhall business around and bring it back to long-term profitability," GM spokesman Jim Cain said.

Last week GM announced last week that it had reached a deal to cut hours at two of its plants in Germany.

GM had a deal in the works for Opel in 2009, but refused to pull the trigger. Now the U.S. automaker probably wishes it had a second chance at such a deal. GM could have a long wait.

GM stock is up 4.4% today at $22.72 in a 52-week range of 18.72-$27.68. The share price rise is likely due to hope for a recovery in the Eurozone economy following today's ECB decision.

Paul Ausick


Filed under: 24/7 Wall St. Wire, Autos, International Markets Tagged: featured, GM
Read Full Story

Markets

S&P 500 2,361.13 2.56 0.11%
DJIA 20,659.32 -42.18 -0.20%
NASDAQ 5,897.55 22.41 0.38%
DAX 12,203.00 53.58 0.44%
NIKKEI 225 19,169.92 -47.56 -0.25%
HANG SENG 24,295.45 -96.60 -0.40%
USD (per EUR) 1.08 0.00 -0.06%
USD (per CHF) 1.00 0.00 0.10%
JPY (per USD) 111.29 0.14 0.13%
GBP (per USD) 1.24 0.00 0.05%

Want more news like this?

Sign up for Finance Report by AOL and get everything from business news to personal finance tips delivered directly to your inbox daily!

Subscribe to our other newsletters

Emails may offer personalized content or ads. Learn more. You may unsubscribe any time.

From Our Partners

19 of the Creepiest, Most Inexplicable Things People Ever Experienced 19 of the Creepiest, Most Inexplicable Things People Ever Experienced
This Elephant Was Separated From Her Mother As A Baby - But She's About To Get A Huge This Elephant Was Separated From Her Mother As A Baby - But She's About To Get A Huge
Man Built This Contraption In His Backyard - And Even He Was Surprised How Well It Worked Man Built This Contraption In His Backyard - And Even He Was Surprised How Well It Worked