Report Says GM Could Continue to Scale Down After Sale of Opel
The manufacturing group decides to stray away from sheer volume.
GM has been wheelin' and dealin' as of late. They unloaded their European brand Opel to the French PSA group, freeing up cap space while pocketing approximately $2.3 billion in the process. This was part of the automaker's transition of focus from volume to profitability, and according to CEO Mary Barra, they aren't finished yet.
Barra recently said in an interview with Automotive News "There’s a little bit more work that we’re doing in the international markets ... Our overall philosophy is that every country, every market segment has to earn its cost of capital." Their decision to sell the Opel brand came as a result of huge costs without equal earnings, and it seems as if GM is looking to cut that out in other markets as well.
One big winner for GM has been China. Their success in that market has been instrumental to the company's gains, displaying a perfect example for the latter part of Barra's quote, "earning its cost of capital". GM can thank the Chinese market for their rank in the contest for world's largest automaker, placing them third behind Toyota and Volkswagen. Expect them to invest big here once again while cutting costs in Australia, India, Indonesia, Russia, and Thailand where they've struggled in the past.
They've also been clinging to their Cadillac brand as it's done exceptionally well in both the American and foreign market. It offers a balance of luxury SUVs and sedans, something that's universally popular. Their recent introduction of V2V Communication in the 2017 CTS shows their dedication to the marque,
GM will more than likely reduce the development of cars for the American market as the money is in SUVs and trucks. Last year, cars made up for only 25.3% of overall sales for the brand. As opposed to cutting more models out of their lineup, GM will probably decide to refresh these units less often.
Expect to see more big moves from GM sooner rather than later. They're looking to make their 2017 even better than last year, so they won't be sparing time to do so.
