GM’s income slashed after European withdrawal

The cost of cutting free Opel – GM’s international division that will make the next Holden Commodore – and halting Aussie Cruze production has hurt the company

GM’s income slashed after European withdrawal
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GENERAL Motors says the sale of its European operations – including Opel, the maker of Australia’s first fully imported Holden Commodore – has led to a huge drop in earnings for the carmaker.

The profit made in GM’s second quarter fell 42 percent, the carmaker reported overnight, to $US1.66 billion ($A2.1 billion) compared with the same quarter last year. For the first half of the year, GM’s running profit is 12.9 percent behind last year at $US4.3 billion.

GM International Operations, the part of the carmaker’s global empire that also oversees Holden’s performance, posted a strong $US340 million result, up by more than $US200 million, despite wearing the $460 million cost of a major restructure that saw it withdraw cars from several markets – including India and South Africa, which significantly are both right-hand drive.

This was down to a higher profit on the cars it sold in the region, combined with “improved results from consolidated international operations” – a factor that includes October’s shutdown of GM’s Australian carmaking operations.

GM noted that since starting its “separation and other programs” at GMIO in 2013, it had accumulated $866 million in expenses to shutter or downscale businesses in Australia, South Korea and India.

Also hitting GMIO’s bottom line was the end to Australian Cruze production. The last of the small four-cylinder cars was built at Elizabeth in October last year.

“Total net sales and revenue decreased due primarily to ... decreased passenger car volumes in Australia due to ceasing production of the Chevrolet Cruze,” it said in an official filing to the US Securities and Exchange Commission.

The results show that GM’s brands in the Asia-Pacific region, Russia, the Middle East and Africa hold an average 9.1 percent market share across the regions in which they sell. In Australia, Holden currently holds a 6.9 percent share for the same six-month period.

GM’s earnings in North America fell primarily because it sold 99,000 fewer cars in its key US market, largely because rental car sales fell sharply.

 

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Barry Park
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