GM Needs to Dump Opel — Analyst

Still, selling the division won’t be cheap. Morgan Stanley’s analyst puts the the cost to GM at around $13 billion, which includes restructuring costs, an equity contribution to the buyer, and GM’s pension obligations to Opel. GM sees the situation differently:

“Despite the tough environment for the automotive business in Europe, we believe we have an opportunity to turn the Opel/Vauxhall business around and bring it back to long-term profitability,” GM spokesman Jim Cain said.

Last week GM announced last week that it had reached a deal to cut hours at two of its plants in Germany.

GM had a deal in the works for Opel in 2009, but refused to pull the trigger. Now the U.S. automaker probably wishes it had a second chance at such a deal. GM could have a long wait.

GM stock is up 4.4% today at $22.72 in a 52-week range of 18.72-$27.68. The share price rise is likely due to hope for a recovery in the Eurozone economy following today’s ECB decision.

Paul Ausick

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