Good Money After Bad -- the GM Version

Cars and Drivers

Published: April 10, 2013 9:20 am

Last Updated: April 27, 2020 10:28 pm

If losses totaling more than $16 billion over the past dozen or so years are not so bad, General Motors Co. (NYSE: GM) apparently thinks adding another $5.2 billion to the fire is pretty good too. That is the amount that GM’s CEO said the company would invest in its European Opel division by the end of 2016.

It boggles the mind. GM has tried to find a partner to help it lose money on Opel, but Fiat and Peugeot both turned the U.S. carmaker away. GM CEO Dan Akerson is quoted by Reuters:

Opel is key to our success and enjoys the full support of its parent company.

Yes, he actually said that. If Opel is a key to GM’s success then GM is doomed.

The only reason for GM to continue to throw money away on Opel is that the German government is forcing the company to do it. Even then, it would certainly cost GM less than $5.2 billion over four years to shut the loser down. If Germany likes it so much, let it pay to keep it open.

GM shares are up fractionally in premarket trading this morning at $27.55 in a 52-week range of $18.72 to $30.68.

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