Sold! GM offloads Opel onto PSA Peugeot Citroen

[kscarbel2]

Car & Driver  /  March 3, 2017

General Motors has officially agreed to sell its Opel and Vauxhall brands to the PSA Group as the Detroit automaker attempts to stanch more than a decade of staggering losses in Europe.

According to a report by Reuters, the PSA Group (Peugeot and Citroën) approved the deal Friday, weeks after admitting it was seeking to buy the German and British brands that GM has owned for 86 and 91 years, respectively.

GM and PSA are expected to announce the deal on Monday, and have resolved their competitive issues in China and the problem of Opel’s billions in pension liabilities.

It is unclear whether the sale indicates GM would essentially give up the Europe market.

GM Europe, primarily the Opel and Vauxhall brands, has lost money for 16 consecutive years.

Cadillac has close to zero market share in Europe, and as of last year Chevrolet no longer sells any cars in Europe aside from the Corvette.

Whether GM sells the Opel Vauxhall entirely (as Ford sold 100 percent of Jaguar and Land Rover to Tata) or completes a merger that would let it retain a stake in PSA, the two former GM brands will inevitably face aggressive cost-cutting measures that will further shed jobs, close factories, and shrink model lineups.

In March 2012, GM took a 7 percent stake in PSA, and the two automakers continued to share product development even after GM announced it was selling that stake in December 2013.

GM took full control of Vauxhall in 1925.

Save for World War II when the German government seized control, Opel has been continuously owned by GM since 1931. Recently, Opel has been a key source of models for Buick; it’s unclear whether that arrangement will continue.

[kscarbel2]

Peugeot owner PSA to buy lossmaking Opel business for €2.2bn

The Financial Times  /  March 6, 2017

GM cuts ties with Europe after a decade of losses in the region

PSA has announced a €2.2bn agreement to buy General Motors’ lossmaking Opel division in a deal that will make the Peugeot and Citroën owner the second-largest carmaker in Europe.

The agreement comes after months of negotiations between the two carmakers that have occasionally stumbled over the issue of Opel’s pension deficit and the ability of PSA to use GM’s electric car technology.

The deal will see GM, which operates under Vauxhall in the UK and Opel in Europe, finally cutting ties with Europe after a decade of losses in the region. The company has racked up more than $8bn in losses there since 2010.

PSA, which only three years ago was on the brink of collapse, is hoping that the acquisition will help it build on its recovery, adding much-needed scale to its operations at a time when it has been losing market share in Europe.

On Monday both companies said the deal was expected to generate annual savings of €1.7bn by 2026, with Opel generating an operating profit margin of 2 per cent by 2020 and 6 per cent by 2026.

Talk of synergies, however, will add to fears of jobs cuts at the groups’ UK Vauxhall plants in Ellesmere Port and Luton as well as in Germany, where two-thirds of Opel’s 38,000 employees are based.

Unions and governments have already expressed fears about a potentially severe restructuring, although PSA has said that it would respect all existing labour agreements — meaning no job cuts at most plants for several years.

Exiting Opel will lead to a non-cash charge of $4bn to $4.5bn for GM. The deal will continue efforts to shed underperforming assets and will free up about $2bn in cash to use for share buybacks, according to a statement.

Mary Barra, GM’s chief executive, said: “We are very pleased that together, GM, our valued colleagues at Opel/Vauxhall and PSA have created a new opportunity to enhance the long-term performance of our respective companies.”

Carlos Tavares, PSA’s chief executive, said: “We are confident that the Opel/Vauxhall turnround will significantly accelerate with our support . . . We intend to manage PSA and Opel/Vauxhall capitalising on their respective brand identities.”

He added that it was “a game-changer for PSA” in a deal where he has taken steps to reassure governments and unions over potential job cuts. He said the idea of closing plants was “rather simplistic” and reiterated that he would respect all existing union agreements.

But he said that long term, Vauxhall and Opel needed to perform better to return to profit and avoid deeper job cuts. “People understand that the only thing that really protects them is their ability to be at the right level of performance.”

Mr Tavares also said the UK car market would suffer in the event of a hard Brexit, but said that it would also be an “opportunity” for Vauxhall and PSA to develop a supplier base in the UK to give the whole operation a “pound cost structure”.

GM will receive €1.32bn for the Opel manufacturing business, of which €650m is in cash and €670m in PSA share warrants. PSA and French bank BNP Paribas will pay a further €900m for the Opel financing arm and operate it as a joint venture, fully consolidated by BNP.

GM will retain most of Opel’s pensions deficit, estimated by analysts at as much as $10bn, despite efforts by GM earlier in the talks to load it on to PSA. On Monday, the companies said only some smaller pension funds will be transferred to PSA, along with a €3bn payment to cover their full settlement.

The companies said Opel/Vauxhall will also continue to benefit from intellectual property licenses from GM until its vehicles progressively convert to PSA platforms “over the coming years”.

The deal includes all of Opel/Vauxhall’s automotive operations, comprising Opel and Vauxhall brands, six assembly and five component-manufacturing facilities and one engineering centre. This represents 40,000 employees, a company statement said. GM is to retain its engineering centre in Torino, Italy.

.

[kscarbel2]

GM agrees to sell Opel, Vauxhall to PSA

Bloomberg  /  March 6, 2017

PSA Group is betting that size is the answer to Europe’s saturated car market as it buys General Motors’ ailing Opel unit despite years of losses.

The French carmaker will pay 1.8 billion euros ($1.9 billion) for Opel, its U.K. sister brand Vauxhall and a stake in the local financing business. CEO Carlos Tavares, who turned around the maker of Peugeot and Citroen vehicles following a bailout in 2014, is bolstering his defenses in a peaking market that’s being transformed by technology, new competitors and Brexit.

Payments by French bank BNP Paribas, which will operate Opel's finacing arm with PSA, will bring the total value of the deal to $2.3 billion.

“It gives us the opportunity to become a real European champion,” Tavares said after announcing the deal, which reinstates PSA as the region’s second-biggest auto manufacturer. “Our plan is to build a common future for Opel and Vauxhall and fix the existing issues.”

Picking up GM’s 1.2 million annual deliveries allows PSA to solidify its turnaround by spreading the costs for developing new vehicles across a larger network, while achieving the savings necessary to compete in a peaking market whose challenges include high wages and wafer-thin profit margins. Gaining scale is vital for mass-market carmakers as they try to stay ahead of self-driving, electric-car innovations and compete with new entrants including Uber Technologies Inc.

Bringing the two automakers together will yield projected annual savings of 1.7 billion euros by 2026 by combining development costs, factory investments and purchasing. That will help Opel generate an operating profit margin of 2 percent by 2020 and 6 percent by 2026. Initially the deal will be a drag, with PSA’s profit margin from automaking likely to drop to 3.8 percent from 6 percent, according to an estimate from UBS AG.

While job and production cuts are likely as the two companies offer a similar slate of mass-market cars from high-cost locations in Germany, France and the U.K., it’ll take years for savings to filter through. Implementing the savings measures will cost about 1.6 billion euros.

“This move, on the paper, is a good deal for PSA,” in part because it gives the French carmaker access to GM’s expertise on electrification and fuel cell technologies, Bryan Garnier & Co. analyst Xavier Caroen wrote in a note to clients. However, “implementing synergies will take time, diluting group’s PSA margin on the short term, while risk of further cannibalization between brands could occur.”

PSA shares rose as much as 5.25 percent to 20.06 euros, the highest level since July 2011, lifting the company’s valuation to 16.8 billion euros.

The deal propels PSA to second place with a 16 percent market share, behind only Volkswagen AG’s 24 percent and pushing it past Renault SA following a steady decline in recent years.

Tavares’s focus on growth comes after a bailout three years ago by the French state and Dongfeng Motor Corp. and a painful restructuring that included freezing pay, weeding out unprofitable models and shutting a plant. PSA went from net losses starting in 2012 to profit in 2015, and generated 2.7 billion euros in cash in 2016. This year, for the first time since 2011, the company will pay a dividend.

.

[kscarbel2]

Why GM decided to sell Opel to PSA

Automotive News  /  March 6, 2017

General Motors executives said they decided to sell Opel because Europe’s changing geo-political and regulatory climate demands more investment at a time when they see a greater need to focus on North America, China and emerging technologies such as autonomous vehicles.

The $2.3 billion deal with PSA Group of France will not only free up GM resources for more lucrative opportunities, but it also will give the automaker a greater ability to return cash to shareholders in a continuing bid to raise its stock price.

“By immediately improving General Motors’ overall business profile, the transaction will enable us to increase our returns to shareholders,” GM President Dan Ammann said at a news conference early Monday in Paris.

“Just as importantly, we will be able to more sharply focus our time and resources on higher-growth, higher-return investments in our core automotive business and in new technologies that are transforming our industry.”

Ammann said the European automotive market has become so different from GM’s other major regions that only 20 percent of the vehicles in Opel’s future portfolio would have been shared with the rest of GM. That means a company such as PSA is in a better position to provide the necessary scale, he explained.

'Industrial logic'

Ammann and PSA Chairman Carlos Tavares repeatedly spoke of the “industrial logic” behind combining of PSA and Opel. For GM, the upside is no longer having to pour money into a region where the benefits to the rest of the company’s operations are diminishing.

“We believe this is the beginning of a new era of achievement for Opel/Vauxhall,” GM CEO Mary Barra said, “as well as a bold and fundamental commitment to GM’s own future of profitable growth and success.”

The sale, expected to close by the end of the year, comes as Opel was close to finally making money again after nearly two decades of losses. But the profit opportunity GM saw in Europe is far less than what it already is generating elsewhere, particularly in the U.S.

PSA said it expects Opel to produce operating margins of 2 percent by 2020 and 6 percent by 2026. That compares to GM’s margins of more than 10 percent in North America for the past two years. The company has projected it will achieve that target again in 2017.

Share repurchase

GM said the deal will free up $2 billion in cash to use toward repurchasing its own shares. The company is in the midst of a buyback program that it recently expanded to a goal of $14 billion.

At the same time, GM said it will have to take a primarily non-cash special charge of $4 billion to $4.5 billion in connection with the sale. GM said it will pay PSA 3 billion euros ($3.18 billion) to settle transferred pension obligations.

GM said Opel will continue to provide some vehicles for its Buick brand and for its Holden unit in Australia. GM and PSA, which have collaborated on some vehicle development since 2012, said they also will work together on electric-vehicle technology.

Last year’s vote by the United Kingdom to leave the European Union clearly played a role in GM’s decision. During today’s news conference, Barra was asked if Donald Trump’s election as U.S. president was a factor, given his emphasis on reducing imports and proposal to tax vehicles that are brought into the country. Barra said only that the “changing landscape” in Europe and other parts of the world led to the agreement.

“This was really a carefully thought-out plan,” she said, “building on the success and the win-win opportunity that we saw because of our work with PSA in the last four years.”

[TeamsterGrrrl]

GM just got a lot more boring.

[kscarbel2]

GM shifts from bigger is better to less global, more profitable

Reuters  /  March 6, 2017

General Motors' decision to sell its European operations doubles down on a bet that the company can win by being less global, but more profitable, in an auto industry increasingly driven by software.

Without the German Opel and British Vauxhall brands, GM last year would have sold about 8.8 million vehicles -- well behind Germany's Volkswagen AG and Japan's Toyota Motor Corp. in the race to be the world's largest automaker by vehicle sales.

Opel and Vauxhall combined sold nearly 1.2 million vehicles in 2016, and generated $18.7 billion in revenue, about 11 percent of GM's total.

However, all of GM's activity in Europe -- the investments in new model designs and cleaner engines, the efforts to make factories more efficient and the wages paid to 38,000 employees -- has generated nothing but losses since 1999.

Meanwhile, GM's business in North America has boomed. GM's home market operations were reborn as a smaller company due in part to the U.S. government led bankruptcy in 2009, with fewer brands, fewer dealers, fewer employees and far less money owed to creditors and retirees.

Since 2009, cheap gasoline has powered a boom in sales of high-profit pickup trucks and SUVs, lifting GM's North American pre-tax profit margins to just over 10 percent in 2016.

To keep its North American profit machine revved up, GM will have to invest in new SUVs and trucks, as well as expensive technology to enable those trucks to meet rising federal fuel economy targets.

Europe is demanding cleaner cars, too. But far less of the technology GM would buy to clean up European diesels and tiny gasoline engines would be useful in the U.S., where larger gasoline engines, including eight-cylinder motors used in pickup trucks, dominate the market.

GM has concluded that it cannot achieve significant economies of scale in emissions technology for Europe on its own, company executives said. Peugeot CEO Carlos Tavares is wagering that he now can gain an advantage against rivals such as Renault SA and Volkswagen AG with the help of the added revenue and sales volume provided by Opel.

France's PSA Group, the maker of Peugeot, Citroen and DS cars, announced a deal to buy GM's Opel division on Monday.

GM's decision to walk away from Western Europe highlights two other profound shifts since 2009, when GM's board scuttled a deal to sell Opel and Vauxhall to a group led by auto supplier Magna International and Russia's Sberbank.

The first is China, now the world's largest auto market with roughly 28 million vehicles sold in 2016, and more growth forecast to come.

As China grows, GM will need to shift more vehicle engineering money and capital investment to feed that market -- which could eventually replace much of the global sales volume sacrificed by the sale of Opel to Peugeot SA.

GM's Buick brand, its primary brand in China, and the Wuling brand of small commercial vehicles GM builds with partner Shanghai Automotive Industry Corp., each outsold Opel and Vauxhall in 2016.

The second factor is the race to transform cars into electrified, intelligent devices that are paid for by the mile instead of purchased on installment plans.

Asked last month whether GM needed more radical restructuring to lift its share price, GM CEO Mary Barra pointed to "the way that we are investing in the future, which I think is a huge opportunity, with transportation-as-a-service," and to "the opportunity that technology has to transform this industry" as factors that could change how the company is valued.

Wall Street unchanged

However, investors have not changed their views yet. Gary Silberg, head of KPMG's Americas automotive practice, said that when it comes to the digital systems and the people required to collect, analyze and manipulate the terabytes of data required to make a car drive itself, Silicon Valley companies such as Google parent Alphabet Inc. and ride services leader Uber Technologies Inc. have the edge.

"The war for talent is absolutely essential to winning in the market place," Silberg said. And those adept in artificial intelligence systems "are not going to work for the auto industry."

GM demonstrated the new economics of the industry last year when it agreed to pay $500 million -- and potentially more -- to buy a tiny San Francisco robotic driving technology startup, Cruise Automation. Ford Motor Co. followed suit with a $1 billion deal to bring aboard and fund the future work of robotic vehicle startup Argo AI.

GM's Barra has told investors that GM would deliver 20 percent or better returns on invested capital, and hold capital spending roughly flat with current levels of $9 billion a year, putting extra cash into share buybacks.

Those constraints on capital force tough decisions, Barra and other senior GM executives have said. The decision to abandon Opel after nearly 80 years is the most momentous yet, and the success or failure of the bet could define Barra's legacy.

[kscarbel2]

Why Ford stands by its 'One Ford' philosophy

Automotive News  /  March 7, 2017

One argument for selling Opel to PSA is that General Motors' global engineering demands suddenly get a lot less complex.

What's more, GM's Detroit bosses say there's far less overlap between Europe and the re‎st of the world these days.

Well, Ford of Europe product development chief Joe Bakaj isn't commenting on GM's retreat from Europe, but he's adamant that Ford sees no reason to step away from its "One Ford" philosophy.

"We're still convinced that our One Ford global engineering‎ structure is working for us," he said. "You can see some of the results on our stand her‎e today.

"The Mustang last year was the No. 1 selling sports car in Europe -- it outsold the Porsche 911 in Germany. How could t‎hat happen without strong One Ford global engineering?"

‎A decade or so ago, the Mustang's manual gearshift was, Bakaj concedes, "a point of contention."

But the current Mustang shifter, developed with Getrag and refined in Europe, has been praised by finicky European car journalists.

"Through One Ford we were able to apply manual transmission expertise in Europe into the global product, and we now have a great-shifting Mustang that has done really well," he said. "That to me is a great example of how global engineering can work for us, taking the best knowledge from each region.

"‎If (Ford product development boss) Raj Nair was here he'd tell you how fortunate he is to have part of his product development team here in Europe. It's a global knowledge base."

A key factor, Bakaj says, is developing mainstream cars that will traverse the Autobahn, Autoroute and Autostrada at breakneck speeds.‎

"It does count," he says. "An example of a great global product is the Focus RS, which we now sell in the U.S."

The Focus RS was set up to go 265 kmh (165 mph) on the Autobahn every day of the week.

"When you develop a vehicle to be safe and controllable at those speeds it forces you to cascade that knowledge right down into the details of every component in the vehicle."

[kscarbel2]

Marchionne says rationale for GM-FCA merger stands, even after PSA buys Opel

Reuters  /  March 7, 2017

Fiat Chrysler CEO Sergio Marchionne said he could approach GM again regarding a potential merger, adding a rationale for a tie-up still existed even after the U.S. rival decided to sell its European operations to PSA Group.

Marchionne has long advocated more tie-ups in the industry to share the prohibitive costs of making cleaner and more technologically advanced vehicles, but his bid to merge with GM was repeatedly rebuffed.

"I never close any doors... I may shamelessly try knocking on the GM door again, or any door, if I thought it was a good thing to do for the business, without even blinking, I could," Marchionne told reporters at the Geneva auto show.

Marchionne said the PSA-Opel deal, announced on Monday, would reduce potential synergies FCA could reap from a tie-up with GM by around 15 percent, but the deal would still be worth pursuing.

The executive stressed, however, that after leaving Europe, GM may be even less inclined to engage in talks with FCA.

 

[TeamsterGrrrl]

This is an admission that GM can't compete for the auto buying Euros and Pounds of the world's most critical drivers.

[TS7]

On Detroit radio heard FCA wants to talk with VW. 

[TeamsterGrrrl]

VW doesn't need Fiat+Chrysler!

That said, all of these deals may get derailed by the European Anti-Trust enforcement agencies. While the U.S. seems to only block mergers and purchases when they will drive market share above a certain point at which they consider a near monopoly, in Europe any consolidation that substantially consolidates market share tends to be rejected. I'm sure GM and PSA know that. Perhaps they're thinking isolationist Marine will win the upcoming French elections and pull France out of the EU?

[kscarbel2]

3 hours ago, TS7 said:

On Detroit radio heard FCA wants to talk with VW. 

Marchionne sees VW bid for Fiat Chrysler as Opel sale seen spurring car deals

Automotive News Europe  /  March 7, 2017

After PSA Group's move to form Europe's second-largest carmaker with the purchase of General Motors's Opel unit, the next step in a looming consolidation wave could be a bid by Volkswagen Group for Fiat Chrysler Automobiles, the Italian automaker’s CEO Sergio Marchionne said.

"I have no doubt that at the relevant time VW may show up and have a chat" for a merger, Marchionne, who plans to retire as Fiat Chrysler CEO by 2019, said at the Geneva auto show on Tuesday. The PSA-Opel combination "threatens VW most, creating a No. 2 on its heels."

Opel's planned sale to PSA, announced Monday, could spur more mergers as manufacturers confront a shift to self-driving, electric cars. PSA's bid to better compete with Volkswagen serves as a test case as CEO Carlos Tavares seeks to replicate his turnaround of the French carmaker at Opel. Successfully integrating the mass-market rivals could then prod others to follow.

"The industry is moving towards consolidation," said Carlos Ghosn, CEO of Renault, who added Mitsubishi Motors to the French carmaker's alliance with Nissan Motor Co. last year. "You're going to see more and more players trying to gain in terms of scale. It's logical because of all the investments we need to face," he said in a Bloomberg TV interview at the show.

'Work ahead'

Purchasing GM's Opel and its Vauxhall nameplate for 1.3 billion euros ($1.4 billion) gives PSA a broader network to spread costs for new vehicles. But the benefits will be slow to realize and follow more than a decade of restructuring that failed to end losses at the GM unit. The critical component for making the deal work is sharing investment underneath the hood while keeping the brands' identities unique.

Teaming up with PSA "offers many opportunities" to share costs in areas including vehicle development and purchasing, said Opel Chief Karl-Thomas Neumann, who will stay on after the deal is completed. "We know we've got a lot of work ahead of us."

PSA is prepared for other deals, including a bid for a stake in Malaysia's Proton Holdings, another money-losing carmaker that’s also the owner of UK sports car brand Lotus.

If PSA manages to bring Opel to "an efficiency level that is equivalent to PSA's today, we will be in a very good position to deal with prospective opportunities that could arise," Tavares said.

'No answer'

Meanwhile, Volkswagen, which is still recovering from its diesel emissions-cheating scandal, is dismissing any extra pressure from the PSA-Opel combination. The company has repeatedly shrugged off interest in major acquisitions as it restructures its namesake VW marque.

"We focus on what we have to do to reach our strategic goals," Volkswagen CEO Matthias Mueller said in Geneva.

For Fiat, Marchionne has long been a vocal proponent of consolidation, arguing that the industry wastes money by developing multiple versions of the same technology. Since GM rebuffed his idea for a merger two years ago, Marchionne has sought to eliminate debt at Fiat to make the carmaker a more attractive partner down the line.

"The GM door was never open for me. I knocked and no one answered," said Marchionne. "Would I knock again? Why not, or at any other door."

[TS7]

FCA will not be around in 5 years. VW would love to have Jeep and Ram.

[TeamsterGrrrl]

Like every other market, they'll probably get down to only 4 players. That's because most of the world's antitrust regulators use a formula that takes the square of each competitors market share, adds them up, and doesn't allow any more combinations when that sum is over 2500. In a market with 4 competitors with each having a 25% market share, the square of 25 is 625, multiply by 4 competitors and we get an index of 2500 and no further combinations are allowed. The EU is a bit tougher and bars combinations that will raise the index substantially even if the result will still be below 2500, but if France becomes afflicted with the current epidemic of nationalism they may leave the EU and it's authority.

[kscarbel2]

Volkswagen rejects FCA’s merger overture

Reuters  /  March 8, 2017

Fiat Chrysler boss Sergio Marchionne on Tuesday said that European market leader VW would be hardest hit by PSA Group's purchase of Opel, which will create a stronger European No. 2, and the pressure could prompt VW to sit down with FCA.

But VW chief Matthias Mueller was quick to rebuff the overtures, saying his company had enough on its plate already as it battles to recover from a diesel emissions scandal.

"We are not ready for talks about anything ... we have other problems," he said at the Geneva auto show on Wednesday.

Mueller's rejection follows a similar snub from GM, after Marchionne said the U.S. company remained his favorite merger candidate despite its decision to exit Europe by selling Opel and having rebuffed FCA's approaches several times already.

"We weren't interested before and we're even less interested now," GM President Dan Ammann said in Geneva.

A combination of VW and FCA could in theory create a European market leader with a share of around 30 percent, give VW a strong foothold in North America through FCA's Chrysler operations and fix FCA's lack of scale in Asia. But the combination could also mean thousands of job losses that unions and politicians from Italy to Germany would strongly oppose.

Mueller also stressed scale was not a priority for VW.

"In my opinion, size does not matter," he said. "I have always said volume is not our sole goal. We want to be a successful manufacturer in every way."

[Dirtymilkman]

I believe Fiat really has nothing to offer anybody. Jeep would be about the biggest thing except their quality is so bad. As for ram, I don't see them being the savior of any company. It hasn't worked for Chrysler on their own and it won't help anyone else. 

[kscarbel2]

GM Finally Leaves Europe Behind

Bloomberg  /  March 10, 2017

It’s the end of an era. Here’s what it means.

After almost nine decades in Europe, the Detroit giant is selling its European unit, Opel, to France’s PSA Group, the maker of Peugeot and Citroën. The deal creates the region’s No. 2 seller of cars (behind Volkswagen AG) and effectively revives an alliance the companies abandoned in 2013.

Fuzzy Math
The sticker price is $2.3 billion, for which PSA gets Opel, Vauxhall Motors, and (together with BNP Paribas bank) GM’s European finance business. GM, in turn, will give PSA $3.2 billion upfront for current worker pensions and spend $400 million annually for the next 15 years to cover payments to Opel retirees. Barclays Bank Plc figures the bottom line is that GM is paying Peugeot $600 million to take Opel off its hands.

The New Company
Together, PSA and Opel have 16 percent of the European market, which will help them spread development costs across a larger number of vehicles.

The Background
Opel has lost almost $20 billion since 1999, and the future looks tough given its focus on low-margin cars and its facilities in high-cost countries such as Germany, Britain, and Spain. Worse, European automakers have the production capacity to manufacture far more vehicles than are sold annually in the region, which keeps a lid on prices.

The Politics
The deal will have to be approved by unions, especially in France and Germany, where workers are guaranteed a say in major decisions. And the French government will be a key shareholder, because it took a stake in PSA following a rescue in 2014.

End of an Era
GM in 2013 pulled Chevrolet out of Europe, so the sale largely brings to a close an adventure it began in 1929 with the purchase of Opel—at the time Germany’s biggest automaker.

.

[kscarbel2]

Why is GM clinging to Cadillac in Europe?

Michael Wayland, Automotive News Europe  /  March 11, 2017

As General Motors bids au revoir to its Opel/Vauxhall operations, the automaker has confirmed it will remain in the European premium market with Chevy performance cars and Cadillac.

But why?

The answer arguably is threefold:

• Why not? Cadillac's European operations are separate from Opel, and given their size, there's little downside to sticking around. 

• The vehicles for sale have higher profit margins and help the reputations of both brands. 

• It's a long-term play to defend Cadillac's and Chevy's statuses -- to an extent -- as global brands. 

"Having some presence is better than having no presence at all," said IHS Automotive senior analyst Stephanie Brinley. "It doesn't have to be high-volume. It has to be profitable."

Cadillac has spent a decade trying to gain traction in Europe against BMW, Mercedes-Benz and Audi. The three German juggernauts account for roughly 85 percent of the region's premium market. Each sold between 820,000 and 840,000 vehicles in the region in 2016, according to the European Automobile Manufacturers Association.

Cadillac's 45 dealerships in Europe -- mostly in Germany and Switzerland -- sold just 781 vehicles last year, up 33 percent from 2015, according to GM. Add in the Chevrolet Camaro and Corvette, which are sold alongside Cadillac in many dealerships, and sales remain lower than many niche exotic brands that sell cars for millions of dollars apiece.

"I don't know the benefits of keeping Cadillac there," said Rebecca Lindland, senior analyst for Kelley Blue Book. "Anytime brands like Bentley or Ferrari outsell you, that's not a positive."

Bentley sold 2,676 vehicles in Europe in 2016; Ferrari sold 3,610.

She added: "I can better understand keeping Corvette and Camaro -- those types of American cars -- more than Cadillac."

Indeed, the success of Ford's Mustang in Europe suggests there's still a viable market for out-of-the-mainstream American sports cars with some heritage. Ford sold 15,300 Mustangs in Europe in 2016, a 44 percent increase from the previous year.

GM said it sold just more than 1,800 Corvette and Camaro cars in Europe last year.

Between the Cadillac and Chevrolet models, GM wants to reach 5,000 annual sales in Europe by the end of the decade, which would remain a tiny sliver of the overcrowded, 15 million-plus-vehicle European market.

"It's a big mountain to climb," Brinley said. "That's the reality of it."

Johan de Nysschen seemed bullish on Cadillac's expansion into Europe when he took over as brand president in summer 2014. But a year into his tenure, he said the company was pushing back those plans to "beyond 2020." 

The move is part of Cadillac's long-term attempt to become a larger player in the global premium market. It continues to grow in China and many developing markets, including the Middle East. The U.S. and China are Cadillac's "volume hubs" while it eyes "disciplined growth in Europe," according to the company. 

"Cadillac global growth plan continues, and is making progress," Cadillac said in an emailed statement to Automotive News. "Realistically, we see our brand as playing more of a boutique role in Europe -- an alternative to the traditional luxury establishment."

Cadillac is continuing with plans "to considerably increase" its dealership network "over the next few years," spokesman Andrew Lipman said. 

In Europe, Cadillac sells the ATS compact sedan and coupe; CTS midsize sedan; CT6 full-size sedan; XT5 midsize crossover; and Escalade full-size SUV. The ATS-V and CTS-V high-performance versions also are available. 

GM's plans to remain in Europe with the Chevrolet sporty cars and Cadillac are similar to its plans for Russia, which included focusing on the premium market with Cadillac. 

In Russia, the brand sells the CTS/CTS-V, XT5 and Escalade/Escalade ESV.

[TS7]

More talk about FCA and VW on Detroit radio ( WJR ).

[kscarbel2]

16 minutes ago, TS7 said:

More talk about FCA and VW on Detroit radio ( WJR ).

Automotive News/Reuters  /  March 14, 2017

As to whether VW had any interest in discussions with Fiat Chrysler Automobiles about a possible merger, Volkswagen’s CEO Matthias Mueller said at the automaker’s annual press conference in Wolfsburg, “There is no contact at this time between me and [FCA CEO Sergio] Marchionne.”

In a later discussion with reporters, Mueller said, "I am not ruling out a [future] conversation."

"It would be very helpful if Mr. Marchionne were to communicate his considerations to me too and not just to you," Mueller told reporters.

[TS7]

That will happen.

[TeamsterGrrrl]

Normally the EU Antitrust regulators would never allow VWAG to make any substantial acquisitions. But with the EU potentially falling apart, a lot of carmakers appear to be positioning themselves for acquisitions they couldn't normally make.

[kscarbel2]

Automotive News  /  March 15, 2017

Fiat Chrysler Automobiles (FCA) CEO Sergio Marchionne said he has "zero interest" in pursuing a merger with Volkswagen AG, despite bringing up the possibility earlier this month.

"I only said that if you were the No. 1 automaker in Europe and somebody combines with another automaker to become the second and gets very close to your position, your very first reaction is to distance the second again," Marchionne said Wednesday. "We are the only natural combination partner for somebody who wants to do that. If you were playing a chess board game, that's what you would do."

Marchionne said he'd be open to listening to offers from VW CEO Matthias Mueller.

"If he wants to come, he knows where I live," he said. "I didn't chase him and I have no intention of chasing him. But if I'm right on consolidation and the fact you need to build scale, we're the natural place to go for him.

"I will not call Matthias. I have no interest."

Marchionne was reacting to comments made by Mueller in Germany about FCA merger speculation on Tuesday.

“There is no contact at this time between me and [FCA CEO Sergio] Marchionne,” Mueller said during a press conference in Wolfsburg. 

But Reuters later reported that Mueller, in a later discussion with German reporters, sent mixed signals on talks with FCA.

"I am not ruling out a conversation," Mueller was quoted as saying.

Marchionne has long advocated consolidation among automakers to share the costs of making cleaner and more technologically advanced vehicles and has repeatedly relayed his desire via the media.

"It would be very helpful if Mr. Marchionne were to communicate his considerations to me too and not just to you," Mueller said Tuesday, speaking in German. 

"I am pretty confident about the future of Volkswagen, with or without Marchionne," he said.

[kscarbel2]

GM now expects $5.5B charge from its sale of Opel

Reuters  /  June 27, 2017

DETROIT -- General Motors now expects the charge for its sale of Opel to PSA Group to reach $5.5 billion versus its previous estimate of $4.5 billion, due to additional costs associated with the deal, Chuck Stevens, GM's CFO, said on Monday.

Opel said earlier this month that its sale to PSA could be completed as early as July 31, pending regulatory approval from antitrust authorities, after the companies initially said the transaction could be completed by year end.

GM said in March that it would sell its chronic money-losing European operations of Germany's Opel and UK sister brand Vauxhall to PSA.

Stevens also told analysts on a conference call that GM expects new vehicle sales in the U.S. to hit a seasonally adjusted annual rate of "low 17 million" units for 2017 and reiterated the company's target to bring U.S. inventories of its vehicles down to 70 days' supply by December from 110 days in June.

[TeamsterGrrrl]

GM just sold off their future... If gas prices go up, they'll be stuck selling asian small cars made by someone else.