GM Signs Off on Its Retreat From Europe
General Motors Co. is hitting the accelerator on its growth agenda now that it has given up trying to extract a profit from Europe and several tough markets around the globe.
GM on Tuesday said it has completed the sale of its Opel AG unit to France's Peugeot, marking the end of 88 years as a mainline car maker in Europe and nearly two decades of heavy losses despite near-constant restructuring. The deal was first announced on March 6.
The Opel sale is the most significant in a string of moves GM has made to jettison unprofitable operations and narrow its focus on moneymakers, including its stout U.S. truck business. In an interview, GM President Dan Ammann said the company is "most or all of the way through" a reduction of its global footprint that is likely to drop GM from the ranks of the world's top three auto makers by sales volume.
"Over the last four or five years, what percentage of our time did we spend solving problems versus pursuing opportunities?" Mr. Ammann said, calling the Europe exit the "biggest step" in sharpening GM's growth plans. "We hope to significantly swing that now to spending most our time and energy on pursuing growth."
For Peugeot, acquiring the storied Opel and Vauxhall brands from GM is a daring move for an auto maker that is still in the early stages of its own financial recovery. Chief Executive Carlos Tavares is betting he can steer a successful turnaround at the brands, similar to the project he put in place at Peugeot when he joined about three years ago.
"We are witnessing the birth of a true European champion today," Mr. Tavares said in a statement. "We will assist Opel and Vauxhall's return to profitability and aim to set new industry benchmarks together."
GM Chief Executive Mary Barra's tenure since taking over in January 2014 has been marked by retreats from markets where GM has sold cars for decades. The Opel divestiture leaves GM as the only major auto maker without a significant presence in Western Europe. It has also thrown in the towel on India, Russia and other markets in which rivals are staking out long-term growth.
GM's strategy comes with risks, analysts say. The largest U.S. auto maker is left more vulnerable to downturns in its home market, as well as China and Latin America--regions it normally ranks in the top two by sales volume.
GM has cited Opel's middling position in the European market, a tightening regulatory environment in the wake Volkswagen AG's diesel-emissions scandal and last year's Brexit vote as key factors in the decision to get out. The auto maker has said the sale will free up about $1 billion in capital annually to invest in more-promising markets and product lines.
Ms. Barra during a conference call with analysts last week ticked off several projects slated for extra resources and attention. Those include the North American truck business--which generates the bulk of GM's global operating profit--and a turnaround effort for the Cadillac luxury brand.
GM and other auto makers also face growing pressure to invest in autonomous vehicles, electric cars and alternative-mobility experiments that aren't likely to generate a return for years.
The Opel sale will shave about 1.2 million vehicles from GM's annual sales, likely dropping it to No. 4 globally behind Volkswagen, Toyota Motor Corp. and Renault-Nissan, from No. 3 last year.
While past GM executives took pride in the company's erstwhile claim to the title of world's largest auto maker, Mr. Ammann is unfazed by the lost market share.
"We've concluded that we can't be all things to all people in all places, " he said.
Write to Mike Colias at Mike.Colias@wsj.com and Nick Kostov at Nick.Kostov@wsj.com
(END) Dow Jones Newswires
August 01, 2017 03:53 ET (07:53 GMT)