Filed under: Europe, Ford, GM, UK
The economic turmoil, lack of consumer confidence and howls for "More austerity!" in Europe have delivered a UFC-like beating to every automaker's books. And with some analysts still wondering if the current euro zone will even survive, it is obvious that it won't be over soon. But is that a reason for both
General Motors and
Ford to stop doing business on the continent, as
Automotive News Editor-in-Chief for Europe Luca Ciferri has written?
The quick summary of Ciferri's reasons for suggesting GM and Ford pull out is that "Europe is the biggest trouble spot in GM's and Ford's global empires and could prevent both from sustaining their current success." Both are losing money there, are likely to lose money for a while, and have other profitable ventures they could focus on in China and a resurgent U.S. - and at least one analyst agrees with the suggestion.
Spefically, GM, via its
Opel/
Vauxhall subsidiary, has lost more than $15 billion in Europe over the past 13 years, $747 million of it in 2011 alone. Opel's current state remains so dire that GM CEO Dan Akerson calls it a "four-alarm fire" and there's
another comprehensive restructuring being
presented this week, following last year's comprehensive restructuring that was meant to fix the same issues. A
commentary in Ward's Auto posits that perhaps short-lived GM CEO Fritz Henderson was right to want to get rid of Opel and is owed an apology. The best that GM can say about the position in Europe right now is that "it appears to be bottoming out," but Greece returning to the drachma or another large dose of pain in Spain could put the lie to that assessment. For Ciferri, the drag right now on profitable earnings elsewhere and the murky future might not be worth the trouble.
Ciferri's case for a Ford exit seems a little pressed, even though the company is estimating a half-billion dollar loss in Europe this year. Growth and margins are on the downswing,
Volkswagen rules the roost and that isn't likely to change soon, and the Blue Oval owns a factory in Romania that is producing the upcoming
B-Max, but because it was bought when markets were humming it is now adding to Ford's European overcapacity. Nevertheless, every automaker is dealing with losses, negative growth and slim margins, Ford has been profitable there six of the past eight years, is still number two in Europe and builds some of the most popular cars on The Continent. GM is determined to weather the storm, but in Ford's case it seems more like it would be foolish not to.
On top of all of that, having two major industrial concerns - both are in the top five in sales - tell already hard-put European governments, workers and buyers, "We're going home now, call us when things get better. Good luck," would practically ensure neither GM nor Ford would earn another euro until everyone involved was making cars in heaven.
Should GM and Ford give up on selling cars in Europe? originally appeared on Autoblog on Fri, 29 Jun 2012 08:29:00 EST. Please see our terms for use of feeds.
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