This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Deal: GM Drops Chevy in Europe

NEW YORK (TheStreet) General Motors (GM) said Thursday it would drop its Chevrolet brand in Europe by the end of 2015, focusing all resources on its ongoing effort to restructure its Adam Opel GmbH unit.

Detroit-based General Motors said the decision would result in one-time charges of up to $1 billion, but should generate long-term marketing, distribution and production savings. Post-shutdown, Chevrolet will still offer specialty vehicles such as the Corvette on the Continent, and will keep a broad presence in Russia and the Commonwealth of Independent States.

GM said that the move would boost its Opel and Vauxhall brands and reduce the complexity of having two competing organizations in a region that has struggled in recent years. The automaker will continue its push to expand its higher-end Cadillac brand in Europe, which the company said remains important to its overall success.

"Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac," company chairman and CEO Dan Akerson said in a statement. "For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest."

GM said the charges, which will primarily be recorded in the fourth quarter of 2013 and the first half of 2014, include asset impairments, dealer restructuring, sales incentives and severance-related costs. The automaker also warned it expects to incur restructuring costs not treated as special charges that will impact earnings at its international operations in 2014.

GM has operated Chevy in Europe since 2005, selling mostly South Korean-built vehicles designed to compete against other budget offerings in Europe. The designs failed to gain traction against competitors including Hyundai and low-cost vehicles from Renault, and have been hit hard by a slowdown in European demand.

Chevy Europe in recent years has been moving up-market, putting it in direct competition with Opel. During GM's government-assisted restructuring, the company considered divesting Opel and likely was positioning Chevy to replace the unit if it was sold. With GM reversing course and pledging to keep Opel in house, Chevy increasingly was seen as redundant.

GM has bled through more than $18 billion in Europe since 1999, but earlier this year pledged to invest 4 billion ($5 billion) in Opel to try to turn the brand around and restore it to profitability.

The move to shutter Chevy in Europe figures to impact production at GM Korea, which manufacturers more than 180,000 vehicles annually for sale in Europe.

Sergio Rocha, GM Korea president, said the company is seeking to become more competitive in the country: "In doing so, we will position ourselves for long-term competitiveness and sustainability in the best interests of our employees, customers and stakeholders, while remaining a significant contributor to GM's global business."

--Written by Lou Whiteman in New York

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs