GM Tries to Save Opel With This Move


The Opel Insignia

In the wake of employee buyouts, labor disputes, and a continuing struggle to find profitability, General Motors (NYSE:GM) has had a tough time selling its European Opel/Vauxhall brand to investors. However, a new restructuring plan will bring the successful Opel operations in Russia under the company’s European wing, according to a company statement. It could be the move that saves Opel in Europe for the time being.

The statement by General Motors highlights how the move will strengthen Opel’s position in Russia. Instead of recording sales as part of its Shanghai-based unit, GM in Russia will now be part of GM’s Europe-based unit, allowing the strong Chevy sales in Russia to boost the perennially lagging division of Europe. Karl-Thomas Neumann, head of GM Europe, said Opel is out to increase market share in Russia. Auto analysts see the move impacting GM Europe most of all.

“This will allow GM Europe to emerge more quickly from the red,” a CAR research institute analyst told Reuters, adding that the shift in accounting will allow Neumann and other European executives to boost morale among the depressed workforce in Germany and other places throughout the euro zone. In early October, GM started buying out contracts of employees at the doomed Bochum transmission plant.

According to Bloomberg, the unsuccessful labor negotiations continue to hurt GM Europe’s operations, thus forcing the automaker to accelerate the closing at Bochum. In recent years, there have been few positive indicators for workers at any of GM Europe’s plants, giving the head of the region a tough time getting the most out of employees. One CAR analyst told Reuters that the restructuring should be read as a win for Karl-Thomas Neumann.

Neumann has seen the structures within General Motors leaving Opel with a limited share of the success, which has doomed the brand, while Chevrolet and Cadillac continue to show strength. Now that Opel Russia and the entire GM operation will report to the European division, the commitment to Opel is clear. GM needs more of this good news for investors to keep the automaker’s profile growing in Europe.

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