DETROIT--The fallout from General Motors' decision to keep its Opel European brand instead of selling it to auto parts maker Magna International could distract the automaker as it tries to focus attention on fi its North American business.
Since backing out of the deal to sell Opel to a consortium of Magna and Russian bank Sberbank, GM has lost its Opel CEO and become the target of both a strike and a cascade of negative publicity.
GM appointed its vice chairman Bob Lutz as Opel chairman following the resignation last week of CEO Carl-Peter Forster, who voiced his opposition to GM retaining Opel. International chief Nick Reilly, now posted in Shanghai, is also lined up to run the restructuring of Opel and its British affiliate, Vauxhall.
Opel has about 49,000 employees, with around 25,000 based in Germany. GM is expected to cut at least 10,000 staffers to get the organization in line with Opel's declining market share. Opel's share of the Western European market was 7.8 percent, down from 8.5 percent the year before. The company had a greater than 10 percent share as recently as 2005.
Lutz told media in Switzerland on Sunday that GM must cut Opel's structural costs by nearly one-third to bring it back to black ink. "The restructuring plan developed at the end of last year by GM is still the basis for a profitable business model. The plan foresees a 30 percent cut in structural costs," Lutz told the Swiss newspaper Sonntag.
Lutz said GM's decision not to sell Opel was due to GM's improving performance in North America and signs of economic recovery in Western Europe.
As GM has changed course, though, its German officials and labor leaders voiced their belief that more jobs could be saved if GM sold the company. Germany's top labor leader, Klaus Franz, said he was willing to negotiate with GM over a restructuring plan, but he has been openly critical of the automaker's performance. "I know that General Motors' traditional method is to cut investments and scrap models, which is exactly what brought Opel to the brink of collapse. It's not Opel that's the problem--it's General Motors," Franz told reporters.
Thousands of German Opel workers staged a walkout to protest against GM's plans to keep hold of European units Opel and Britain's Vauxhall.
Last year, Opel fell from the No. 2 brand in Western Europe (behind Volkswagen) to No. 3 as Ford passed the GM brand. With mounting negative publicity around GM, and now around Opel in Germany--its single biggest market--the company is expected to lose more market share, putting even greater strain on GM's ability to make it profitable again.
"Europeans have a great many choices in the cars they buy, and Opel was already sliding in popularity before all of this," says Helmut Schmidt, a Munich-based auto-industry analyst. "I would expect Volkswagen, Ford and Asians like Toyota and Hyundai to gain more business from defecting Opel owners in the coming year."