General Motors decision to pull the plug on Chevrolet in Europe is one of several calculated moves the U.S. automaker appears to be making around the world that analysts and investors say are long overdue.
According to a person familiar with the plans, last weeks announcement about Chevrolet was approved by the board of directors back in October and it was done so the company could instead focus on rebuilding its Opel brand after failing to garner significant market share for Chevy in the region.
We also know that Australian media reported on Friday that GM has also decided to end its manufacturing operations there as early as 2016. While GM has not confirmed those plans, a source told Reuters that GM Korea, which stands to lose Europe as an export market for the Chevy vehicles it builds, may in turn boost exports to Australia.
“GM is under-earning relative to its size,” said a banker, who described GM’s current moves as terminating unfinished business from its 2009 bankruptcy reorganization. “Maybe it’s them finally deciding that they have to restructure the company in a much more comprehensive way.”
The banker, who asked not to be identified discussing a sensitive topic, said GM still has about half the operating earnings of global rivals Toyota and Volkswagen even though their sales are similar.
Morgan Stanley analyst Adam Jonas called the moves part of a more coordinated approach at a Detroit-based company that now seems more willing to upset some of its constituents – dealers in Europe and employees in Korea – in its quest to improve its long-term financial health.
Analysts and investors said GM’s about-face in Europe, where it had previously insisted Chevy could work alongside Opel, and its move to gradually shift work away from its Korean operations finally show a willingness to tackle a bloated bureaucracy left over from its bankruptcy reorganization.