The luxury automaker Opel plans to sell six facilities in
Europe to its U.S. parent
General Motors Company
) in order to win extended funding. The transaction includes an
engine plant in Hungary, a development center in Turin, Italy,
and a facility in Gliwice, Poland.
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The decision will help the Ruesselsheim, a Germany-based
automaker receive funding till 2016. Opel is obligated to pay
back a loan to GM by 2014.
A few months back, Opel announced to cut its administrative
workforce by 30% or 1,000 jobs at its Ruesselsheim headquarters
in Germany as part of GM's 10-year plan "Drive Opel 2022" that
include reduction in personnel costs. Opel also shut down two
plants in Britain, located in Ellesmere Port and Luton. The move
idled 3,000 workers at the plants.
Opel faces weak car sales, high fixed costs and excess production
capacity. These resulted in a total loss of $17.3 billion since
In the first half of 2012, Opel's loss amounted to €938 ($1,200)
per vehicle sold, according to the CAR Center of Automotive
Research at the University of Duisburg-Essen. Its deliveries in
Europe dipped 15% to 457,630 vehicles due to weak demand
emanating from the debt-crisis in Europe and strong competition
from Asian automakers.
Opel expects to report an operating loss of €1 billion ($1.3
billion) in 2012 due to fewer car sales than anticipated. The
unit expects to sell 1.4 million vehicles in 2012, which are
about 100,000 units less than the earlier projected sales.
In order to reverse the 12 years of losses in Europe,
particularly from the Opel brand, GM formed a global alliance
PSA Peugeot Citroen
). The pact will help both the automakers reduce at least $2
billion in costs. In order to strengthen the market position, GM
also plans to expand Opel's lineup by introducing 23 models by
The present Euro zone financial crisis has affected the
operations of many global automakers, especially GM and
Ford Motor Co.
). Both the automakers have a significant exposure to the market.
GM, a Zacks #3 Rank (Hold) stock, posted a 9.7% fall in earnings
to 93 cents per share (excluding special items) in the third
quarter of the year from $1.03 in the corresponding quarter a
year ago. However, earnings per share in the quarter far exceeded
the Zacks Consensus Estimate of 61 cents.
Revenues in the quarter grew 2.5% to $37.6 billion, surpassing
the Zacks Consensus Estimate of $36.3 billion. Worldwide sales
volume inched up 1.6% to 2.3 million units from 2.2 million units
a year ago. However, total market share declined to 11.6% from
12.1% in the third quarter of 2011.
Operating income fell 11.2% to $1.6 billion from $1.8 billion a
year ago. However, adjusted earnings before interest and tax rose
4.5% to $2.3 billion from $2.2 billion a year ago.