According to a report from Morgan Stanley, General Motors Europe and its (now-two) brands Opel and Vauxhall will finally turn a profit in 2015 thanks to cost-cutting and restructuring measures. Sales, however, are expected to remain sluggish throughout the rest of the decade. Coincidentally, GM-Opel predicts a break-even scenario. But breaking even or turning a slight profit isn’t necessarily cause for elation.
That’s because the investment firm estimates GM Europe to be worth about negative $11.5 billion, $4.5 billion more than its previous estimate of negative $16 billion. To note, Opel-Vauxhall lost $1.8 billion in 2012, or 10 percent of the almost $18 billion in losses the brands/operating units have racked up since 1999. Morgan Stanley believes that, by the time GM reports its full-year 2013 earnings, the unit will have lost about $837 million for all of last year.
GM Europe says it will break even by mid-decade, and Morgan Stanley analyst Adam Jonas believes the division is finally on target.
“We estimate GM Europe will generate $0.4 billion of combined profit over the next four years. We have improved our forecast for losses at GME further to $260 million in 2014 versus our estimate of $837 million in 2013, with a positive margin of one per cent for 2015 and 2016”, Jonas wrote in a report.
“We forecast Opel’s revenues to stagnate from roughly $20.1 billion in 2013 to $20.4 billion by 2017 on a backdrop of a shallow European recession. From this point we grow Opel revenue at between one and 1.5 per cent through 2021.”
GM Europe has taken several restructuring measures in recent months, one of which was to close its manufacturing plant in Bochum, Germany. In early 2013, Opel announced a $5.25 billion plan to develop 23 new vehicles and 13 engines by 2016.
According to Automotive Industry Data, Opel-Vauxhall sold 794,000 cars in Western-Europe in 2012, bringing its market share to 6.7 percent. This figure is expected to increase as the Opel Adam city car, recently-updated Insignia, and new Mokka continue to bolster sales.
Comments
That is Great News !!!!
What a money pit. US Treasury would have broken even if GM sold opel as recommended by auto task force. Stock would $75 right now.
@A P Sloan
lol do you need to type out your wild ‘predictions’ because no one wants to hear it?
It’s about God dam time!
@andrew
Wild prediction? MS say Opel is worth a negative $15B. Up from negative $20B.
Ever $10B is worth around $10 in stock price. We have operating losses and restructuring costs of over $15B over last few years. Also, if treasury got their investment back or profit, it would be very valuable PR.
Wild prediction, or sensible math?
Without Opel, both Chevy and Buick China would have huge holes and be reliant on old models like Chrysler.
Opel only losses money on paper. Imagine what Opel profits would be if models and tech sold by Buick and Chevy were included?
GM is playing a mathmatic shell game.
Opel was paid for it’s engineering work so your theory is bull
Actually, the licensing feed go to GM NA, not Germany. Also, had all those cars been sold as Opel, the brand would be in the black.
Let’s get real, GM, Opel, gets huge tax benefits for loosing money. Also, GM would have no excuse to close factories, pay laid off workers with government help, if fees were returned to the EU.