Raised on a New Zealand dairy farm, Dan Ammann is now trading away General Motors' once-sacred cows.
As GM's president, Ammann headed the negotiations with PSA Group of France that led to the sale of Opel last week. A former Wall Street banker who had no operational experience in autos when GM hired him as treasurer in 2010, Ammann is now leading what he has called a "ruthless" drive to unload or slash funding to long-held units that have poor prospects for big profits in the future.
Chief among those was Opel, which GM owned for 88 years. Opel lost money for 17 consecutive years, and today's GM has no interest in continuing to throw money at it in the hopes of generating a single-digit profit margin a decade from now. GM came close to selling Opel in 2009 but backed off at the last minute, afraid of the ramifications such a big divestment would have on the company as a whole.
Under Ammann and CEO Mary Barra, there's no such hesitation today.
"We've decided the mass-market, high-volume opportunity in Europe is no longer compelling for our company when we weigh the significant risks along with our competitive position," Ammann said on a conference call with analysts last week.
Ammann, 44, the only one of GM's top four executives whose career at the automaker began later than 1983, gives the company the aggressive but pragmatic perspective of an industry outsider as it weighs cutting off operations that have been entrenched for decades. GM is freeing up cash to use for share buybacks and mobility services -- two needs that Ammann has promoted as making the company more attractive to his former colleagues on Wall Street -- in addition to higher-margin vehicle lines.
GM's leadership team began seriously discussing the possibility of selling Opel last fall in connection with its capital-allocation strategy, according to a person briefed on the talks.
"Mary kind of set the direction, and Dan did the deal," this person said.
The Opel sale follows decisions in recent years to exit Russia and halt manufacturing in Australia because those markets were no longer attractive to GM.
"I think it's a much clearer realization that resources are scarce," Ammann told Automotive News in 2015, after GM announced plans to pull out of Russia. "We have a wide range of things that we could invest in. The technology investment requirements of the business are only going to go up."
Ammann said at the time that GM could more decisively strip out unprofitable business lines because improvements to its financial accounting systems allowed it to more precisely track profits and losses from each market, down to individual product lines. Ammann led that overhaul as GM's CFO, before moving into the president's job in January 2014, when Barra became CEO.
