New General Motors Co. (NYSE: GM) CEO Mary Barra traveled last week to Rüsselsheim, Germany, on her first trip as the company’s new chief and committed the company to sticking with its Opel and Vauxhall brands currently manufactured at three plants in Germany. That commitment just got stronger according to a report in German newspaper Frankfurter Allgemeine Zeitung.
According to the report, the German auto workers union IG Metall and Opel have agreed on specific investment commitments for GM’s three German plants in Rüsselsheim, Eisenach, and Kaiserslautern. The company has extended its no-layoff commitment to the union by two additional years, stretching the agreement out to 2018. The union also said the Rüsselsheim plant will build a new “brand” based on Opel’s Insignia model.
GM is also considering plans to build a right-hand drive car in Germany based on its Holden or Buick models for sale in Australia. GM plans to halt its Australian production of Holden models in 2017, and Opel’s Rüsselsheim plant is already set up to build right-hand drive Vauxhall models for sale in the U.K. According to the newspaper report a decision on whether to build another model in Rüsselsheim is due by March of this year.
Over the past dozen or more years GM has lost north of $16 billion on its Opel division and last April the company committed another $5.2 billion in investment through 2016. By then, GM expects Opel to break even.
It could happen. GM will post a loss of around $200 million in the fourth quarter of 2013 in its European division. Bad as that may sound, it’s less than half the $500 million the company lost in the fourth quarter of 2012. Of course GM now reports sales in Russia as part of its European division, which helps pump up the numbers. In the third quarter of 2013, GM sold 68,000 cars in Russia compared with 61,000 in Germany. U.K. sales led the European division with sales of 78,000 units.
GM reports fourth-quarter and full-year 2013 earnings on Thursday. The consensus estimates for quarterly earnings per share (EPS) and revenues are $0.86 and $40.89 billion, respectively. In the same period last year GM posted EPS of $0.48 on revenues of $39.31. For the full year the consensus estimate for EPS is $3.38 on revenues of $155.42 billion. In 2012 the company posted EPS of $3.24 on revenues of $152.26.
GM’s shares closed at $36.08 on Friday in a 52-week range of $26.19 to $41.85.
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