Barra Exercises Trump Like Ruthlessness - All Divisions Must Make A Profit Or Risk Being Axed

After pulling the trigger on a sale of its European operations, General Motors signaled that it's willing to cut off more vestigial corners of its business in a decidedly unsentimental drive to improve its profit margins and stock price.

CEO Mary Barra made clear last week that the Opel deal is not the end of the automaker's effort to pare its portfolio, though other moves under consideration are unlikely to have the sweeping impact of effectively abandoning one of the world's largest and most mature markets.

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mre30 - 3/13/2017 12:21:07 PM

+4 Boost

That approach makes a lot of sense - its really the only way to run a company. For a legacy firm like GM, the issues are cost control/ensure viability first, product line and product mix second.

The era of 'economies of scale' as a huge strategic advantage are basically over. Its important, yes, but no way as important as it was 20 or 30 years ago.

In order of priority:
(1) China
(2) Culling dealer network in US
(3) Standardizing componentry
(4) Electric/hybrid strategy
(5) Allocating resources to specific brands (by my measure GM's two most important brands are Buick (China) and Chevy (US)). Cadillac/GMC/Corvette(which should be its own brand)will be tinkered with around them margins but the fate of any of those are not truly material to GM as a whole.

Just my two cents.

MDarringer - 3/13/2017 7:34:23 PM

0 Boost

This explains why GM has no interest in FCA which has two winning brands (Jeep and Ram) and a lot of detritus (Dodge, Chrysler, Fiat, Lancia, Maserati, and Alfa Romeo).

TomM - 3/14/2017 8:34:28 AM

+3 Boost

There were times when the shoe was on the other foot - and Opel made good profits when the USA did not do as well. And when the fuel embargo's hit - it was the ability to produce smaller cars wit smaller engines engineered in Europe that saved GM. I am not so sure GM is actually leaving the European market - as much as they are moving away for a while to see how BREXIT plays out. One thing is for sure though - the cost of doing business in Germany is costing lower end manufacturers. IF Opel had moved production out of Germany - I believe they would still be a part of GM. With the American Economy now settling back as far as car sales - profits will be harder to come by for GM.

I can see a future where GM returns to Europe by Buying one of the producers - maybe even PSA. OR - I could also see GM getting rid of Holden next - since they cannot really make profits of any size in Australia.