gm needs to cut european losses analysts
Last Updated : GMT 14:33:55
Arab Today, arab today
Arab Today, arab today

GM needs to cut European losses: analysts

Arab Today, arab today

Arab Today, arab today GM needs to cut European losses: analysts

London - AFP

A new alliance between General Motors and French automaker PSA Peugeot Citroen underscores the US auto giant\'s desire to stem losses in Europe piled up by unit Opel-Vauxhall. While the US auto giant has made a comeback at home, its European operations, focused on the Opel and Vauxhall brands, have sagged amid high costs, tough competition and the weak EU economy. \"This is an issue GM has been dealing (with) for 12 years,\" said Michelle Krebs, an analyst at automotive industry news website Edmunds.com. On Wednesday GM and Peugeot -- Europe\'s number two automaker -- said they would form a global partnership with GM taking a seven percent stake in the French firm. The two companies agreed to share vehicle platforms and create a joint venture to purchase commodities and other goods and services. They targeted $2 billion in annual savings within five years from the alliance. The global partnership comes more than two years after GM was forced to take some $50 billion in rescue aid from the US government in a bankruptcy restructuring in 2009. The largest US automaker has made a stunning comeback since then. For 2011, GM reported $7.6 billion in net income, breaking the annual record as sales surged in the United States and China, and reclaiming its title as the world\'s largest automaker from Toyota. But Europe remains the US automaker\'s biggest weak spot: although halved from 2010, GM lost nearly $750 million in Europe in 2011. And with the government under pressure to recover its investment, the European operations are dragging down GM at a time when \"it is really important to boost the stock price so the government can sell its stake,\" Krebs said. The Treasury holds a 32 percent stake, or 500 million shares, which are worth $13.2 billion at the stock\'s current level of around $26. That is believed well below the cost of the Treasury\'s investment, and lower than the $33 per share reached when the \"new\" GM returned to trading on the New York Stock Exchange in November 2010. That puts the Opel-Vauxhall division in focus. With production in Britain, Germany and Eastern Europe, the sister firms have been burdened by high production costs. Opel sold some 1.2 million vehicles last year, while Vauxhall\'s sales hit just 150,000 in the first half of the year. In early February, GM chairman and chief executive Dan Akerson stressed the company\'s determination to end the European red ink, including by cutting production. \"We have to match capacity with demand and demand has been falling,\" he said. Ahead of Wednesday\'s announcement, analysts painted a mixed picture of its utility. A 7.0 percent GM stake in Peugeot would be \"ill-conceived at best,\" Bank of America Merrill Lynch analysts said in a research note. The alliance \"would be more of a deeper dive into a thicket than a solution,\" they said. \"The most straightforward solution to GM\'s European losses, in our view, would be to reduce capacity at least by one-third.\" Krebs though called the partnership a move in the right direction, if they shut down capacity. \"If it results in some closing of plants it could be a positive in terms of stemming the losses for both companies,\" Krebs said. But if they only move to joint development of engines or vehicles, \"I see the advantage as being minimum.\" Krebs stressed that GM has no interest in getting rid of its loss-making European unit. In 2009 it had tried to sell the Opel business but then decided to keep it on concerns a sale would compromise its technology. \"Opel is excessively important. It\'s where GM\'s diesel technology comes from,\" she said. \"German engineers are the best\" in diesel technology, giving GM an edge over its competitors, she said. \"You can feel it when you drive a car,\" she said. \"They can\'t lose that expertise.\"  

arabstoday
arabstoday

Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

gm needs to cut european losses analysts gm needs to cut european losses analysts

 



Name *

E-mail *

Comment Title*

Comment *

: Characters Left

Mandatory *

Terms of use

Publishing Terms: Not to offend the author, or to persons or sanctities or attacking religions or divine self. And stay away from sectarian and racial incitement and insults.

I agree with the Terms of Use

Security Code*

gm needs to cut european losses analysts gm needs to cut european losses analysts

 



Arab Today, arab today
Arab Today, arab today Jordanian woman reveals her project

GMT 00:46 2017 Saturday ,11 November

Jordanian woman reveals her project
Arab Today, arab today Visit Jamaica for more than just sun

GMT 09:45 2017 Tuesday ,21 November

Visit Jamaica for more than just sun
Arab Today, arab today Keep kids busy at Thanksgiving gatherings

GMT 11:14 2017 Friday ,10 November

Keep kids busy at Thanksgiving gatherings
Arab Today, arab today UN warns of conflict in Gaza

GMT 08:39 2017 Tuesday ,21 November

UN warns of conflict in Gaza
Arab Today, arab today Missouri problem mirrors woes

GMT 06:46 2017 Tuesday ,21 November

Missouri problem mirrors woes
Arab Today, arab today
Arab Today, arab today
Arab Today, arab today Australian academic's book pulled

GMT 15:20 2017 Monday ,13 November

Australian academic's book pulled
Arab Today, arab today May under Brexit pressure at EU reform summit

GMT 02:14 2017 Saturday ,18 November

May under Brexit pressure at EU reform summit
Arab Today, arab today Delhi half-marathon to go ahead

GMT 03:51 2017 Saturday ,18 November

Delhi half-marathon to go ahead
Arab Today, arab today The history of solar eclipses

GMT 05:16 2017 Sunday ,20 August

The history of solar eclipses
Arab Today, arab today VW says will invest over 34bn euros

GMT 07:19 2017 Tuesday ,21 November

VW says will invest over 34bn euros
Arab Today, arab today Driverless, electric future just round

GMT 02:45 2017 Monday ,20 November

Driverless, electric future just round
Arab Today, arab today Fedra happy for “Between Two Worlds” success

GMT 09:23 2017 Saturday ,18 November

Fedra happy for “Between Two Worlds” success
Arab Today, arab today paObama climate envoy slams Trump's rejection

GMT 16:04 2017 Friday ,17 November

paObama climate envoy slams Trump's rejection

GMT 12:15 2017 Friday ,17 November

Mona Abdel Ghany increased artistic activities

GMT 11:15 2017 Thursday ,16 November

Angola oil boss sacked by father's protege

GMT 18:41 2017 Friday ,20 October

Designer Aql Faqih aspires to innovation

GMT 11:38 2017 Wednesday ,15 November

Unloved vultures fight for their survival

GMT 11:49 2017 Thursday ,17 August

Egyptian artist presents new collection of designs

GMT 00:54 2017 Monday ,20 November

Mideast in danger as London explores

GMT 03:12 2017 Saturday ,18 November

Prince's vision spurs new Cornwall village

GMT 17:12 2017 Monday ,07 August

Al-Shawaifi reveals secrets of total solar eclipse

GMT 16:53 2017 Tuesday ,05 September

Youssra depended on colored foam
Arab Today, arab today
Arab Today, arab today
 
 Arab Today Facebook,arab today facebook  Arab Today Twitter,arab today twitter Arab Today Rss,arab today rss  Arab Today Youtube,arab today youtube  Arab Today Youtube,arab today youtube
arabstoday arabstoday arabstoday arabstoday
arabstoday arabstoday arabstoday
arabstoday
بناية النخيل - رأس النبع _ خلف السفارة الفرنسية _بيروت - لبنان
arabstoday, Arabstoday, Arabstoday