A Wall Street analyst has released a new report stating that General Motors will be best served by selling or shutting down its money-losing Opel unit. GM has be struggling to turnaround its European division for the last several years.
Adam Jonas, an analyst for Morgan Stanley, wrote in a report released on Thursday that GM should cut its losses and sell the Opel brand. Jonas estimates that the decision to sell Opel would likely cost GM about $13 billion in contributions and restructuring. However, Jonas says that route will be far more palatable than sustained loses for the next several years.
"One of the worst things in the auto industry is owning a cash-burning, resource-consuming business," he wrote. "We believe the time has come for GM to find a new home for Opel."
GM doesn't necessarily agree with Jonas' viewpoint.
"Despite the tough environment for the automotive business in Europe, we believe we have an opportunity to turn the Opel/Vauxhall business around and bring it back to long-term profitability," GM spokesman Jim Cain told Reuters.
GM's European operations have lost about $16 billion over the last 12 years. Those losses will continue to mount for the foreseeable future, with GM expected to lose $1.4 billion in Europe this year.