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Christopher Bruce2012-09-07 15:57:36

Morgan Stanley Says GM Needs to Get Rid of Opel

General Motors has been facing problems in Europe for years, but it may finally be coming to a head.

Financial services company Morgan Stanley is recommending that General MotorsGMGMUnited States of America, 1998 > present8 models
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do whatever it can to get rid of OpelOpelOpelGermany, 1863 > present85 models
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. Its analyst says that the failing European market will not return to pre-crisis levels soon, and even if its costs money in the short term, dumping Opel would make financial sense in the long term.

Morgan Stanley predicts losing Opel would cost GM $13 billion. According to Morgan Stanley, it is possible GM would have to include $3 billion to $7 billion in cash to make Opel attractive to buyers. 

"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 said.

The argument for GM getting rid of Opel is that the company puts financial, manufacturing and engineering strain on GM and nets them a financial loss. 

Morgan Stanley has been a financial consultant to GM in the past. 

GM attempted to sell Opel to Magna International in 2009 but pulled out of the deal at the last moment. In the last 12 years, GM has lost $16 billion in Europe. 

If GM does get rid of Opel, it is unclear what will happen to its European ChevroletChevroletChevroletUnited States of America, 1911 > present82 models
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brand that sells mostly inexpensive, global cars. 

Source: Automotive News






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