DETROIT/FRANKFURT (Reuters) - General Motors Co (GM.N) Chief Executive Daniel Akerson is reviewing options for what to do with Opel, a money-losing European unit the executive was in favor of selling in the past, people familiar with the matter said.
The sources, who asked not to be identified, told Reuters on Thursday that selling Opel was not realistic, playing down reports by two German magazines that the sale option was being explored again. However, the sources added Akerson is clearly frustrated with Opel’s inability to return to profitability.
“Akerson is fed up with Opel, and the turnaround isn’t gaining traction,” said a person familiar with the GM CEO’s thinking who declined to be named.
“He is trying to think of all possibilities to improve performance. But a sale is wishful thinking.”
Auto Bild and Spiegel Online said possible buyers could be Chinese carmakers or Germany’s Volkswagen (VOWG_p.DE). The magazines cited no sources.
General Motors declined comment. Opel also declined to comment, but its CEO, Karl-Friedrich Stracke, called the reports “pure speculation” in a letter to employees.
Volkswagen had no comment.
GM dropped plans to spin off Opel in 2009 after months of negotiations to sell it, and embarked on a drastic restructuring to get the unit, which lost $1.6 billion last year, back on track.
Akerson was one of only two GM board directors who voted against keeping Opel in late 2009, believing Europe was a market of national champion automakers -- VW in Germany, Fiat FIA.MI in Italy and Renault (RENA.PA) in France -- and pan-European luxury brands like BMW (BMWG.DE) and Daimler AG’s (DAIGn.DE) Mercedes, a person familiar with Akerson’s thinking said. Opel is neither and Akerson believed it would be a long, uphill battle to fix it.
Several sources told Reuters there is no formal sales process for Opel at this point.
GM executives feel “frustration” with the pace of Opel’s turnaround and are concerned the unit, in its current form, may not be sustainable in the long term, one person familiar with GM’s thinking said.
However, trying to sell Opel outright to another automaker is an unlikely option because the business is closely integrated with the rest of GM’s global operations on technology and vehicle platforms, that person said.
GM may instead try to establish an alliance with another European automaker as a way to cut costs, the source said. A Chinese partner also could be an option.
GM shares closed 2 percent higher at $29.45 on Thursday.
Akerson said in March that Opel was still losing money despite selling more cars, and on Tuesday at the company’s first shareholder meeting since its initial public offering last fall he said the region still had restructuring to do but was making strides.
GM has been recovering in the United States after a $52 billion taxpayer-funded bailout and has been looking to its business in China, the world’s biggest car market, to help drive growth.
European bankers said it would be difficult to sell Opel in the current environment.
Last time around, the German government and European countries that are home to Opel factories lined up a total of 4.5 billion euros ($6.57 billion) in loan guarantees to achieve a sale.
Now the German government is seen having its hands full with efforts to avert a sovereign default by Greece. Also, GM’s relations with Berlin were soured after the U.S. carmaker performed a U-turn on talks to sell Opel two years ago.
A German government source said on Thursday Berlin was not involved in any talks over Opel at the moment.
Officials with the U.S. Treasury, which still owns 32 percent of GM’s common shares, declined to comment.
Opel is expected to break even this year and show a profit in 2012. But its management has said it will likely take about five years to restore the brand’s image in its home market after the carmaker appeared close to the brink for months.
CEO Stracke said in the letter to employees, which was seen by Reuters, that Opel was making very good progress.
“Incoming orders are very good right now. For the factories in (Britain‘s) Ellesmere Port and (Poland‘s) Gliwice we have already added eight shifts to meet demand for the Astra,” Stracke said in the letter.
The company also said in a statement it planned to shorten the traditional summer shutdown at its main German factory in Ruesselsheim to meet demand.
Opel’s works council said the reports that GM was considering a sale of Opel were “pure speculation” and called on the parent company to deny them.
GM had so far “kept Opel as it might otherwise lose technology and for other good reasons,” Klaus Franz, head of the works council, said in a statement.
One source suggested the reports might be a “not very clever” negotiating tactic to pressure Opel’s unions for greater flexibility or a “Plan B” that GM worked up as it weighs its options.
Stracke will address the rumors on Friday in a “town hall” meeting with employees at Ruesselsheim plant, an Opel spokesman said.
Additional reporting by Rene Wagner in Berlin, Matthias Inverardi in Duesseldorf, Jan Schwartz in Hamburg, Jonathan Gould and Arno Schuetze in Frankfurt, and Soyoung Kim in New York; Writing by Maria Sheahan and Peter Dinkloh. Editing by David Cowell and Matthew Lewis