GM is going from bad to worse
Keith Crain is editor-in-chief of Automotive News.
It's a good thing that General Motors has North America and China to rely on for sales, products and profits.
But what's going on in Europe?
No one understood why GM got involved with PSA Peugeot Citroen by acquiring 7 percent of the company in March. Now, only a few months into the deal, it looks like GM executives made a big blunder. The weak European car market has made the value of the Peugeot stock worth less than the valuation carried on GM's balance sheet.
I hope GM executives were smart enough to stick an escape clause into their deal with Peugeot so they can put their tails between their legs and quietly slip away. It didn't make sense then, and it makes less sense now.
Meanwhile, instead of trying to fix Opel, which has decades of strong recognition with Europeans, the same GM officials are adding Chevrolet into the mix and completely confusing customers.
It will take decades for Chevrolet to establish anywhere near the recognition that Opel has. GM got rid of some pretty strong car brands in North America, including Pontiac, and is starting from scratch to introduce Chevrolet in Europe. GM will spend billions of euros to establish a new brand and dealer organization when it already has the well-established Opel and Vauxhall brands.
GM should allocate that money to fixing Opel rather than trashing a strong existing brand.
GM needs good car people and European finance folks to figure out what Opel needs and then do it. It would be more productive and less expensive than starting another brand in Europe.
People who know the car business realize how difficult and expensive it is to establish a brand in a market, particularly an American brand that is an import to Europeans.
GM needs people with automotive experience at the top of the corporation. It needs top executives who have had operational experience in the automotive industry. The current situation offers plenty of evidence for the GM board.
Much work remains for GM before the U.S. government has a prayer of getting back its money.
The government still has a big stake in GM, but it's up to the company's directors to figure out what needs to be done. It will be interesting to see if they do what has to be done.
You can reach Keith Crain at firstname.lastname@example.org.