For those of you keeping score at home, General Motors has experienced its fair share of executive turbulence over the past month, and a flood of financial peril in the meantime. But GM CEO Dan Akerson is defending it, saying his company will get better and will take aggressive actions if it needs to in order to change course quickly.
“In recent weeks, you have seen that we do not hesitate to act when change is required to make the business stronger,” Akerson said after the company’s recent shakeup.
Early this week, Chief Marketing Officer Joel Ewanick was sent packing amid rumors that he didn’t vet a sponsorship deal for a European soccer team appropriately before signing off on the deal. North American design leader and would-be vice president of GM Europe David Lyon left his post last week before he was to start in Germany this week.
In addition, GM removed former European president Karl-Friedrich Stracke from his position last month and replaced him with Vice Chairman Steve Girsky on an indefinite interim basis. That, however, could have been the result of information released this week: GM lost $361 million last quarter in Europe, bringing its total bloodletting to $617 million for the first half of 2012.
That’s a lot of money. In fact, despite profits in four of five regions, General Motors was down some $280 million on the first half of 2012 to $1.97 billion. That’s enough to drop its stock price to one of its lowest point since going public again in November 2010, when it opened at $33 a share. Now, it’s hovering just under $20 per share.
“In the past, we haven’t moved fast enough to fix things we can control,” Akerson said. “But that has changed.”
The General Motors executive team has restructured its European operations, getting some people in there who worked at Volkswagen’s operations and aligning itself with French automaker Peugeot to further consolidate costs. Will that be enough to curtail its mounting losses? Hard to say. The eurozone debt crisis has caused inflation to run amok in much of Europe as the instability of the euro currency has gotten out of hand. Think of it as Europe having its own version of what happened in the U.S. in 2008.
Given that outlook, it’s hard to say when General Motors will be able to reverse its instability and bring its overseas operations back to profitability.
Source: The Detroit News