General Motors considers Europe’s debt crisis a “more serious” situation than the 2008 housing bubble that caused the global recession, GM CEO Dan Akerson said today.
“The ’08 recession, which was a credit bubble that manifested itself through primarily the real estate market, that was a serious stress,” Akerson said at the Detroit Economic Club. “The government took some insightful actions. This is much more serious,” he added.
General Motors has been losing money in Europe for more than a decade, as the group hasn’t recorded an annual profit on the continent in more than 10 years. GM’s European operations lost $292 million before interest and taxes in the quarter ending September 30, GM announced last week as it reported a 2.5 percent drop in net income for the third quarter.
Analysts have lowered their estimates for GM’s adjusted earnings in the fourth quarter by a whopping 49 percent, after the company said last week that results for the period would be similar to 2010, with the company blaming weakness in Europe.
“We’re dealt a hand and we have to play it as best we can. It may get a little ugly at times, a little bumpy,” Akerson said of Europe. The CEO has no doubts the euro zone will face severe problems. Asked if some countries such as Greece may eventually leave the euro zone and cause the breakdown of the currency, Akerson replied: „I wouldn’t doubt it. I know they’re going to fight to hold the euro. I wouldn’t be surprised to see a two-tier system. You have these economies that are more sound than others.”