Log in
Forgot password ?
Become a member for free
Sign up
Sign up
Dynamic quotes 

4-Traders Homepage  >  News  >  Business Leaders  >  All news

Business Leaders

Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesHot NewsMost Read NewsRecomm.Business LeadersCalendar 
HomeAll newsMost read newsBusiness Leaders Biography 
Age : 55
Public asset : 15,344,054 USD
Biography : Ms. Mary T. Barra is Chairman & Chief Executive Officer at General Motors Co. and a Member at The Bu

Barra's move to sell Opel signals a deeper change at GM

share with twitter share with LinkedIn share with facebook
share via e-mail
02/15/2017 | 12:17am CET
A combination picture shows the logos of Opel and Peugeot car manufacturers at dealerships of the brands in Strasbourg

General Motors Co (>> General Motors Company) Chief Executive Mary Barra’s decision to put the company’s European operations on the block marks a turning point for the automaker that once prided itself on being the No. 1 vehicle maker in the world.

General Motors Co (>> General Motors Company) Chief Executive Mary Barra’s decision to put the company’s European operations on the block marks a turning point for the automaker that once prided itself on being the No. 1 vehicle maker in the world.

If Barra succeeds in concluding a deal with French automaker Peugeot SA (>> Peugeot) – and people familiar with the discussions cautioned on Tuesday that many details are yet to be settled – she will have delivered in an unexpected way on her promise to have GM “disrupt ourselves” rather than wait to be jolted by outside forces.

Selling Opel will mean GM no longer seeks to be a key player in all the major auto markets, but rather is focusing on cash flow and profitability instead of sales volume.

There are risks to abandoning markets, especially one as large as Western Europe. GM faces a continuing fight to stop losing share in its core markets. At the same time, Barra faces pressure to do even more, with GM's share price - even after Tuesday’s nearly 5 percent gain - below the $41 level it had just before she took over the company.

“We believe (GM) investors are willing to accept more radical measures to optimize capital allocation,” Morgan Stanley analyst Adam Jonas wrote in a note.

Shedding GM Europe isn’t the technology-driven disruption Barra usually refers to in presentations to investors. But it is a major course change for the company.

GM executives long argued that owning Germany's Opel provided the company with the engineering know-how to develop small and medium sized cars it needed for U.S. and Asian markets. That's one reason why GM in 2009 pulled the plug on a plan to sell its European business to supplier Magna.

But small cars are now losing ground in the United States, China and elsewhere to sport utility vehicles. At the same time, tougher emissions and safety regulations are making European vehicles more expensive, and harder to sell in other markets, analysts said.

What's also changed since 2009 is GM's relations with its Chinese partners, which give it an alternative to developing small cars in Europe. GM is engineering a new low-cost vehicle lineup for Asia and Latin America with its Chinese partner Shanghai Automotive Industry Corp, a sign of how far Chinese automakers have progressed.

Bob Lutz, former GM Vice Chairman and head of product development, said on Tuesday GM could structure a deal with PSA that would still allow for joint product development, and could leave open the possibility of exporting certain Cadillac or Chevrolet models to Europe.

“The proceeds from the sale (which would do wonders for the stock price) would permit acceleration of the business in North America and China; a far better use of resources,” Lutz emailed, adding he had not been in contact with anyone at GM.

Analysts cautioned on Tuesday the price of the deal could be low. The final price will depend on how GM and PSA would share – or not share – intellectual property, pension liabilities, debts and restructuring costs, analysts said.


Even after its traumatic 2009 bankruptcy, GM fought to remain a significant player in all the major world auto markets, and to be competitive with rivals Toyota Motor Corp and Volkswagen AG for the title of world’s largest automaker by vehicle sales.

Selling Opel would mean GM is setting aside those traditional measures of success to be a smaller company focused on the United States truck market, China and some - but not all - the large, growth markets in Latin America and Asia. Under Barra’s leadership, GM has exited Russia and Indonesia after concluding it couldn’t earn acceptable returns on investment.

Barra has made return on invested capital, cash flow available for share buybacks and profitability the key measures of GM’s success, not sales volume.

GM Europe fails those tests, despite more than $1 billion spent on restructuring efforts since 2012.

“The decision to exit is Business Strategy 101 – move resources away from unattractive markets with weak competitive positions, toward attractive markets with strong positions – especially areas that are likely more crucial for GM's long term success,” wrote Barclays analyst Brian Johnson in a note Tuesday.

GM declined to make Barra or other top executives available for comment Tuesday

(Reporting by Joe White; Editing by Phil Berlowitz)

By Joseph White

Stocks treated in this article : Peugeot, General Motors Company
share with twitter share with LinkedIn share with facebook
share via e-mail
Latest news about Mary Barra 
02/15 MARY BARRA : Barra's move to sell Opel signals a deeper change at GM
2016 MARY BARRA : GM CEO Barra's compensation $28 million for 2015, up 72 percent
2016DJMARY BARRA : GM's Profit More Than Doubles
2016 MARY BARRA : Investor says GM 'tone deaf' to give Barra CEO and chairman roles
2016 MARY BARRA : GM's CEO Barra says she believes in growing China market
2016DJMARY BARRA : GM Names CEO Barra Chairman Of Its Board
2016DJMARY BARRA : GM's Mary Barra to Add Chairman Role
2015DJMARY BARRA : Focus on Margins, Not Volume Is Paying Off
2015DJMARY BARRA : GM Well-Positioned in China Despite Slower Demand, CEO Mary Barra Says
2015 MARY BARRA : FCA's long-odds GM pursuit hangs on Marchionne's deal record
2015 MARY BARRA : Company 'cooperated fully' with Justice Dept probe
2015 MARY BARRA : GM CEO Barra confident about value of company's stock
2015 MARY BARRA : GM CEO Barra received $16.2 million in 2014 compensation
2015DJMARY BARRA : GM CEO Mary Barra, Others to Be Deposed Over Defective Switches -- Update
1  2  3  4  5  6  7  8  9  10Next

Most Read News 
02/17DJWARREN BUFFETT : Kraft Heinz Needs a Deal, But Can It Really Afford Unilever? -- Heard on the Street
02/18 BRIAN MOYNIHAN : Bank of America CEO Moynihan gets biggest payday yet
02/18 DAVID HENRY : Citigroup cuts CEO Corbat's pay after missing financial targets
02/21 CARL ICAHN : Wsj
02/17 JOHN FALLON : Pearson's turbulent markets to put Fallon's homework to the test
02/20DJWARREN BUFFETT : Kraft-Unilever Deal Is Off, but Warren Buffett's Anomalies Live On
02/21DJWARREN BUFFETT : Top Company News of the Day
More news

Popular Business Leaders 
Alain Afflelou Bernard Arnault Vincent Bolloré Warren Buffett Jean-paul Clozel Gary Cohn Tim Cook Leonardo Del Vecchio Michael Dell Barry Diller Klaus Engel Bill Gates Carlos Ghosn David Henry Jean-françois Hénin Carl Icahn Anshu Jain Isabelle Kocher Andrew Liveris Maurice Lévy Jack Ma Laurent Mignon Lakshmi Mittal Luka Mucic James Murdoch Elon Musk Peter Nicholas Ferdinand Piëch Georges Plassat Patrick Pouyanné Sumner Redstone Wolfgang Reitzle Alexandre Ricard Wilbur Ross Howard Schultz Charles Schwab Carlos Slim George Soros Ulrich Spiesshofer Rupert Stadler Bernard Tapie Ratan Tata Tidjane Thiam Peter Thiel François Villeroy De Galhau Thomas Wilson Martin Winterkorn Dieter Zetsche Mark Zuckerberg
A-Z Business Leaders