Does General Motors (NYSE: GM ) actually have a plan for its troubled German subsidiary, Opel, or is it flailing?
If the German business press is to be believed, it's looking like the latter: A Handelsblatt report suggested that last week's firing of GM Europe chief Karl-Friedrich Stracke was done "impulsively" by GM CEO Dan Akerson after Stracke had told him that Opel would fall short of a 2016 financial target.
Opel's board named a new interim chief on Tuesday. Is this the beginning of a real turnaround, or just more evidence -- as Handelsblatt suggested -- of disarray at the top of General Motors?
Progress? Depends on your perspective
The short answer is that it doesn't look good, at least from the German perspective, but it's hard to say. Tuesday's appointment of restructuring expert Thomas Sedran to Opel's helm is arguably an encouraging sign, even as Sedran is being positioned as yet another "interim" chief for the troubled automaker. Sedran, who is German, joined Opel's board in April from auto-industry consulting firm AlixPartners, where he had advised Akerson and GM on previous efforts to restructure Opel. If his mandate is to put together a realistic turnaround plan and hand it off to a long-term successor to execute, he appears to be a solid choice for the role.
But that successor will have his or her work cut out for them. Unsurprisingly, the near-term outlook for Opel is grim -- as The Wall Street Journal reported on Tuesday, GM expects to report "substantial losses" in Europe at least through 2012. GM is far from alone, of course: Ford (NYSE: F ) recently warned of growing losses in the region, and Europe-based carmakers from Renault to PSA Peugeot Citroen have reported sharp sales declines and red ink as a sagging regional economy continues to depress auto sales and crush margins.
But Opel is in much worse shape than key rivals like Ford and Volkswagen (OTC: VLKAY). Opel has lost over $16 billion since 1999, the last time it turned a profit on an annual basis, and several different restructuring plans have been tried over the last decade, to no avail. Whether or not you buy Handelsblatt's take on the story of Stracke's ouster, it's obvious that Akerson and his lieutenants are frustrated with the slow pace of the effort to remake Opel. In particular, many observers, including your humble Fool, thought that the turnaround plan approved by Opel's board didn't go far enough toward fixing the unit's biggest problem: too many factories producing not enough cars.
Apparently, Akerson felt the same way. So what comes next?
How many turnaround plans will it take?
The plan approved last month included a tentative agreement with Opel's unions to delay scheduled pay increases -- in return for promises to avoid layoffs and to wait until after 2016 to close an Opel factory in Bochum, Germany. Meanwhile, Opel expects to step up its efforts to expand sales of the brand's vehicles in emerging markets like Russia in an effort to increase utilization of its existing factories.
GM second-in-command Steve Girsky, who is the chairman of Opel's Supervisory Board and who took over Stracke's role as head of GM Europe (again, on an "interim" basis) last week, said in a statement that GM would "continue to work on implementing and further improve our corporate plan." What does that mean? "We will reduce bureaucracy and change the culture of our company," he said.
GM is still determined not to sell or close Opel, according to reports. But eight months after Akerson sent his top executives to Europe to fix Opel once and for all, GM's money-torching subsidiary appears no closer to a permanent fix. Speaking as a GM shareholder, it's getting harder and harder to be optimistic about Opel's prospects.
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