Published November 15, 2012
FRANKFURT – General Motors will not sell its loss-making European unit Opel or "simply close up shop and leave" it, the U.S. carmaker's Chief Executive told more than 5,000 staff in Germany.
Former private equity manager Dan Akerson has come under pressure from investors to divest or unwind Opel, which Morgan Stanley forecasts will post another $1 billion in annual operating losses on average through 2021 after $16 billion over the past dozen years.
While other senior executives have defended Opel's role within GM, this is the first time that Akerson has sworn loyalty in front of the workforce.
"Our protracted losses have even prompted some analysts to argue that we should sell Opel or simply close up shop and leave car sales in the region to others - I'm not about to do that," he said in a speech on Thursday.
"As a global auto company, GM needs a strong design, engineering, manufacturing and sales presence in Europe. There's room for Chevrolet in Europe but Opel fulfils that role."
Unlike his number two, Steve Girsky, who called Opel "vital" to the operations of GM, analysts believed Akerson was open to a more radical approach given his minority view to sell Opel to Magna late in 2009.
But the GM CEO made it clear that the 23 new models and model replacements entering the market by the end of 2016 were proof that GM was committed to helping its European brand.
"If our intention was to simply declare Opel bankrupt, or let it drift until the economy rebounds, we wouldn't be wasting our time and money with these investments," he said.
Speaking with Girsky at the Ruesselsheim plant, also home to the brand's headquarters, Akerson's pledges of loyalty in English were projected on a screen with German subtitles.
"Recommendations that we 'cut and run' show you that some people simply do not see how important Opel is to our success," Akerson said.
"They also overlook the key role Opel and the ITDC (engineering and development centre) play in GM's global product development plans, and Opel's expertise in CO2 reduction and other technologies that have application around the world," he explained.
Earlier this week, people familiar with the matter told Reuters that GM and PSA Peugeot Citroen had shelved talks on a deeper tie-up amid misgivings about PSA's worsening finances and a government-backed bailout.
Akerson, who said GM planned to grow and not shrink Opel as unions feared, only briefly mentioned GM's French ally.
"The fact is we lack economies of scale in critical areas and if we can achieve scale by partnering with PSA, that's what we are going to do," Akerson said.
One Opel employee who attended the event said the general reaction was largely positive.
"I wouldn't call it thunderous, but there was applause. (...) Some might still be cynical but overall it was seen as a clear commitment to Opel and the important role it plays within GM - I don't think it was interpreted as Akerson playing some tactical game."
(Reporting By Christiaan Hetzner; Editing by Maria Sheahan and Helen Massy-Beresford)