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GM bets smaller is better

Monday, March 06, 2017 - 01:33

Its sale of its European operations is the biggest step in GM's drive to become smaller but more profitable. Fred Katayama reports.

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GM is betting that smaller is better. Its sale of its European operations announced Monday yet another sign of its drive to become more profitable as it becomes less global. It's selling its money-losing Opel division to the maker of Peugeot, PSA. Giving up the German Opel and British Vauxhall brands would make GM the world's third largest automaker behind Volkswagen and Toyota. It ends GM's relationship with Europe that goes back to the 1920s. GM has been losing money in Europe since 1999. Reuters' Transportation Editor Joe White. SOUNDBITE: JOE WHITE, TRANSPORTATION EDITOR, REUTERS, (ENGLISH) SAYING: "General Motors has been shopping away for the last two years or more at operations around the world that don't make money. Up to now, those operations have been relatively small. They exited russia. They scaled back in Thailand. They exited Indonesia. They stopped manufacturing cars in Australia. Getting rid of Opel is big but it's based on the same bet that GM is better off if it can concentrate its capital on high-profit markets, mainly North America, China." Other reasons for exiting Europe: Amid the U.S. craze for gas-driven sport utilities and pickup trucks, GM has less need for Europe's clean diesel technology, and it needs to invest in those trucks to meet rising fuel economy targets. Plus, GM needs to invest more in engineering to supply the world's largest auto market, China. That market could eventually replace much of the sales volume it'll lose by offloading Opel.

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GM bets smaller is better

Monday, March 06, 2017 - 01:33