General Motors almost sold its money-losing European division in 2009 before deciding not to do so, hoping its fortunes had reversed. In the seven years since Europe has drained an additional $8 billion out of GM???s coffers. After warning recently of more losses in the region in 2017, GM is looking for a way out, confirming talks with PSA Group that it said could lead to a sale of Opel.
GM hasn???t turned a profit in Europe since 1999. Executives previously said they hoped to break even in 2016 and that the division was on track to do just that until the United Kingdom???s surprising vote to leave the European Union in June. GM cut its losses in Europe by two-thirds last year and the car manufacturer is continuing its transformation under CEO Mary Barra into a company dedicated to maximizing profit margins in North America and China.
The talks with PSA follow GM???s pull-out from Russia and Australia because it no longer saw those countries producing adequate returns on its investment. Meanwhile, GM earned a record $12 billion profit in North America last year. GM has controlled Opel since 1929 but the unit has struggled to make a profit for years amid increasing competition from the likes of Hyundai Motor and Volkswagen???s Skoda, which both have lower costs than the German-based manufacturer.