Recent GM Moves Indicate Possible Closure or Sale of Opel

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Vice Chairman Stephen Girsky took over for Karl-Friedrich Stracke by running GM of Europe at the end of business on Friday, there has been speculation about what this means for OpelOpelGermany, 1863 > present85 models
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. Some experts are speculating that GM is planning on closing Opel completely, according to interviews done by Automotive News Europe. 

GM has been unsure about what to do with Opel for a while and replacing Stracke is just the most recent step. In 2009, GM was going to transfer control of Opel to Magna but changed its mind at the last moment. Then it decided that it would get financial support from German states for its factories, and after lobbying them, changed its mind again. 

As Stracke left, Opel was in the middle of difficult labor negotiations with Germany's IG Metall labor union. With Girsky taking over, the question becomes whether GM will take a harder line on trying to reduce costs on Opel labor. 

Wolfgang Meinig, head of the FAW automotive research department at the University of Bamberg, says radical cuts are needed now more than ever to nurse the company back to health.

"The most senseless thing a loss-making company can do is maintain existing overcapacity and guarantee jobs under pressure from unions and politicians - it's deadly, like a millstone around the neck of someone drowning. There is only one way to guarantee jobs and that's by earning a profit," said Wolfgang Meinig, head of automotive research at the University of Bamberg in an Automotive News interview. 

If things continue to be uncertain at Opel, it is possible that workers will begin moving to other German automakers or suppliers. That could put Opel in further jeopardy. 

There is some logic in GM getting rid of Opel. Europe is GM's weakest major market. It is very strong in North America and China and decently strong in South America. However, Opel has lost $3.5 billion for GM in three years. It may decide that it is better off dumping the company and focusing on where it is easier for it to make money.

Europe's emissions regulations make cars more expensive to build than in North America or China. Also, European labor tends to be more expensive and the competition is much stiffer because there are more manufacturers in the market. If GM sees no long-term future for Opel, than the argument for it dumping the company is there. GM also has the new, smaller investment in PSAPeugeotFrance, 1882 > present120 models
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that exposes it to less risk in the region. 

"After all the wrong decisions taken, I really am concerned whether it will still be around in 10 year's time," said Meinig. 

Source: Automotive News Europe