The unprofitability of GM’s European operations is nothing new; the division has been losing money for nearly a decade (if not slightly longer), and GM estimates that it will lose $1.5 billion to $1.8 billion this year alone. But there is light at the end of the tunnel, as the automaker has announced during its third quarter earnings conference yesterday that “break-even EBIT-adjusted results are targeted by mid-decade” for its operations in the region.
As such, the restructuring undertaken by General Motors roughly three years ago that are currently headed by vice chairman Steven Girsky, is looking to pay off in the mid-distant future. In addition to this announcement, GM has also cut more than 2,000 workers in Europe this year and is looking to trim another 300 to reduce costs while establishing a partnership with PSA Peugeot Citroen to realize greater economies of scale in operations, research and development, as well as manufacturing. The operating arm has also begun exporting Opel vehicles to non-European markets, such as Australia and Argentina.
As such, GM is in it for the long run when it comes to Europe — as we very well knew already. But whether the company will stay the course and keep Opel, or change out the brand for something else entirely, is still an interesting question. Given the timing of GM’s expected turnaround, it would seem that it could go both ways… but we’re betting on the former alternative.