As Hurricane Issac storms the southern region of the United States, General Motors is currently weathering a financial storm in Europe with regards to Adam Opel AG and its twin British brand Vauxhall. Perhaps the storm has been going for too long, according to financial analysts.
According to Reuters, Morgan Stanley analyst Adam Jonas stated in a research note that dumping Opel would be the best thing for the Detroit automaker. However, such a move would require some serious overhead, with an estimated $7-$13 billion upfront going towards restructuring, an equity contribution to a buyer and funding Opel’s pension obligations.
“One of the worst things in the auto industry is owning a cash-burning, resource-consuming business,” wrote Jonas, who has an “overweight” rating on GM shares. “We believe the time has come for GM to find a new home for Opel.” However, General Motors officially stated that it remains committed to the brand.