Despite GM Europe’s protestations that it had no plans to shut plants to stem a flood of red ink at its Opel-Vauxhall subsidiaries, rumors gathered momentum today that a closure announcement was imminent.
The rumors were generated because an Opel Supervisory board meeting was being held.
GM put out a statement this afternoon saying a regular meeting of the board was held, and no further announcements would be made. Last weekend GM Europe President Karl-Friedrich Stracke repeated in a newspaper interview that no plant closures would be made through 2014.
IHS Automotive, in a press release today, said despite Stracke’s statement, it appears increasingly inevitable that some of the company’s European facilities will be shuttered eventually.
The situation at Opel-Vauxhall is getting worse, according to investment bank Morgan Stanley, and it raised its loss estimate for GM Europe in 2012 to $1.5 billion from its previous projection of a $1.1 billion loss.
“We further revise downward our profit forecast for GME (in 2012) from a $1.1 billion loss to a $1.5 billion loss. We cut production volumes by two per cent to a 7.1 per cent drop, including an 18 per cent drop in the first quarter, and see additional headwinds in pricing and mix,” said Morgan Stanley analyst Adam Jonas.
GM Europe lost $747 million in Europe in 2011. It has lost $15.5 billion since 1999.
IHS Automotive analyst Tim Urquhart said U.S. management is likely to demand more action than just production and purchasing efficiencies promised by the recent alliance with France’s Peugeot.
“The company’s U.S. management will not accept ongoing losses and talk of increased production and purchasing efficiencies will not generate the kind of structural savings that Opel-Vauxhall needs in a contracting European market,” Urquhart said.