General Motors is keen to unload its money-losing European divisions, but it’s going to cost another $1 billion, according to Reuters. The automaker’s chief financial officer, Chuck Stevens, told analysts on a conference call that the costs associated with the deal warrant the extra monies.
When GM announced the sale of Opel, Vauxhall and its European operations to PSA Groupe, it said it would take a non-cash special charge of $4 to $4.5 billion in the process. It also stated it would pay $3.18 billion to settle pension obligations.
During the call, Stevens also said GM has adjusted its new vehicles sales to “low 17 million” as new car sales continue to plateau. Additionally, plant shutdowns are planned to help bring GM’s inventory rate down to a 70 days’ supply by this coming December.
Comments
Wow.. Sad, very sad. PSA should get the award for the deal of year from this one.
Horrible! Opel is a damaged brand about to break even with great offerings like Astra, a refreshed Mokka and the new PSA SUV twins which will only add new customers.
GM lacked courage to close plants. Two needed to be shuttered to increase productivity (as Ford long ago did).
The new GM will be a lean, mean acquisition target. Maybe a alliance with PSA a la Renault/Nissan would be of benefit? Possibly Ford?
Remember, most of these charges are not money being spent, just writing down the value of the businesses they were carrying on their asset books to reflect what they are actually selling for. It is in GM’s best interest to do this, as any write down is a part of the cost of doing business ( like depreciation of their plants and equipment), and will be deducted from their income, thus lowering their income tax bill.