Bloomberg News

GM’s European Unit Opel Is Not for Sale, CEO Akerson Says

July 27, 2011

(Updates with executive comment in eighth paragraph.)

July 27 (Bloomberg) -- General Motors Co. Chief Executive Officer Dan Akerson said the company’s Opel unit in Europe isn’t for sale.

“We don’t comment on speculation, and there’s been a lot of speculation. But I will say this: Opel is not for sale,” Akerson told reporters today at a briefing about the start of contract talks with the United Auto Workers. The automaker has lost $14.5 billion in Europe since 1999.

GM said in a July 13 statement on its website that Volkswagen AG Chief Executive Officer Martin Winterkorn was stoking speculation that Detroit-based GM was looking to sell Opel. The VW chief’s comments followed reports last month in German magazines Der Spiegel and Auto Bild that GM may be considering a sale of Opel.

European operations would have broken even in the first quarter without a $395 million charge to goodwill, GM said in May. The carmaker lost $1.8 billion in Europe last year. Opel’s market share in Europe rose to 7.4 percent from 7 percent for the first five months of this year.

GM fell 95 cents, or 3.3 percent, to $28.14 at 4 p.m. in New York Stock Exchange composite trading. The shares have declined 24 percent this year, and reached their lowest level since GM’s $33 a share initial public offering on Nov. 18.

Akerson spoke at a briefing with reporters at the company’s Detroit-Hamtramck vehicle-assembly plant, which builds the automaker’s Chevrolet Volt plug-in hybrid car. GM and the UAW used the plant as the setting for the formal beginning of talks for a new labor contract to replace the current one that expires Sept. 14.

Labor Talks

UAW President Bob King is negotiating for a deal that rewards members after the $7,000 to $30,000 in concessions that he says each worker gave since 2005 to help U.S. automakers survive.

“We’re focused jointly on managing our structural costs, but at the same time giving opportunity to share in the success of the company going forward,” Akerson said. GM has “a reasonably competitive cost structure today,” he said.

King, 64, has pledged to organize a U.S. plant owned by a foreign automaker this year to expand the union’s bargaining power beyond GM, Ford Motor Co. and Chrysler Group LLC, plus Mitsubishi Motors Corp.’s Bloomington, Illinois, plant.

“We certainly wish the UAW success in their efforts,” Cathy Clegg, GM’s vice president of labor relations, said in reference to the UAW’s goal for organizing other manufacturers.

Revamping Opel

Opel, based in Ruesselsheim, Germany, is working with AlixPartners LLP on tweaking options packages or production plans to spur higher prices, two people familiar with the matter said this month.

They are also studying ways to reduce engineering and manufacturing costs, said the people, who asked not to be identified disclosing private plans. Some new features include headlights tuned to high-speed driving on the Autobahn.

Opel Chief Executive Officer Karl Friedrich Stracke in April predicted an operating profit for the year. The automaker relies on Opel to engineer small and midsize cars, such as the Chevrolet Malibu midsize sedan and Cruze compact.

Winterkorn was quoted in the Frankfurter Allgemeine Zeitung earlier this month saying that if Opel were for sale, a Chinese automaker would be more likely than Hyundai Motor Co. to buy it. The comment “continues a regrettable pattern of fanning speculation” that Opel is on the sales block, GM said on July 13. The automaker said it is making progress in restructuring the business.

--With assistance from David Welch in Southfield, Michigan. Editors: Bill Koenig, Jamie Butters

To contact the reporter on this story: Craig Trudell in Detroit at ctrudell1@bloomberg.net

To contact the editor responsible for this story: Jamie Butters at jbutters@bloomberg.net


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