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Supervisor
Elham AbolFateh
AR
Tuesday 22 August 2017

Automobile

Barra's move to sell Opel signals deeper change at GM

Wednesday 15/February/2017 - 12:24 PM
Sada El Balad
Edited by Alaa Turki

General Motors CEO Mary Barra’s decision to put the company’s European operations on the block marks a turning point for the automaker that once prided itself on being the No. 1 vehicle maker in the world.

If Barra succeeds in concluding a deal with French automaker Peugeot SA -- and people familiar with the discussions cautioned on Tuesday that many details are yet to be settled -- she will have delivered in an unexpected way on her promise to have GM “disrupt ourselves” rather than wait to be jolted by outside forces.

Selling Opel will mean GM no longer seeks to be a key player in all the major auto markets، but rather is focusing on cash flow and profitability instead of sales volume.

There are risks to abandoning markets، especially one as large as Western Europe. GM faces a continuing fight to stop losing share in its core markets. At the same time، Barra faces pressure to do even more، with GM's share price -- even after Tuesday’s nearly 5 percent gain -- below the $41 level it had just before she took over the company.

“We believe (GM) investors are willing to accept more radical measures to optimize capital allocation،” Morgan Stanley analyst Adam Jonas wrote in a note.

Shedding GM Europe isn’t the technology-driven disruption Barra usually refers to in presentations to investors. But it is a major course change for the company.

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