As General Motors strategizes to restructure its loss-making European operations, a source familiar with the automaker’s European unit told GM Authority that the losses are more “on paper than anything else”.
Speaking on the basis of anonymity, the source explained that Opel doesn’t “get paid for its share of development, engineering, or design” when it comes to rebadged vehicles. The prime example is the Buick Regal, which was, barring a “few minor exceptions, conceived by the staff at GM Europe” as the Opel Insignia. “For every Regal sold in North America or in China, Opel doesn’t see a cent.” The same is true for the Buick Verano/Excelle — which also was predominantly developed by Opel as the Astra.
In effect, Opel doesn’t get residual revenue from products it primarily developed. “The school of thought is that they [Opel] will earn plenty from selling their cars in home turf, resulting in a free car for Buick.”
Another item of contention is the fact that the platforms that are engineered by Opel “are handed over to GM to use as they wish without charge.” Engineers in Europe “spend years developing things like the Epsilon, Delta, and Gamma for Opels; then when Chevy wants to make a compact sedan, it has most of the work all done”, said the source referring to the Chevrolet Cruze. “The same is true of the Malibu, Aveo [Sonic], Buick Regal, Verano”.
The source admitted that no one really knows how much the losses amount to if tallied up, but said that the practice has been going on “for years”. “It would be the same as if Opel decided to build a heavy duty diesel pickup and used the GMT platform and the Duramax V8 [developed in the U.S.] free of charge.” “The problem is cash flow for technology sharing.”
In addition, we were told that the problem will become further exacerbated as GM integrates Opel and Buick on a global level, with the next vehicle to be available free of charge to Buick being the Opel Mokka, aka Buick Encore subcompact crossover.
GM Europe reported a loss of $300 million in the first quarter of 2012 compared with break-even result in the same time frame a year ago.