For engineering, the good and the bad of GM's move to unload Opel
Photo credit: BLOOMBERG
The sale, if you can call it that, of General Motors’ Opel and Vauxhall brands to PSA Group will have wide-ranging effects on General Motors as an engineering organization. And some will be positive.
GM and PSA agreed Monday on a deal that sees the French company pay GM 2.2 billion euros ($2.3 billion) for Opel and Vauxhall, but GM has to sink 3 billion euros into Opel/Vauxhall’s pension plans. So to my eyes, this deal doesn’t look much like a sale.
That said, once Opel/Vauxhall is gone, GM will no longer have to worry about engineering a vast array of vehicles to meet both European and U.S. federal crash and emissions standards.
Before the deal came together, GM says only 20 percent of the vehicles in Opel’s future product lineup were to be shared with the rest of GM, so the European unit’s benefits to the rest of the company would have been diminished.
GM also told analysts Monday that another motivation for the sale came after the company determined it could not independently achieve significant economies of scale in emissions technology across Europe, where smaller engines and diesels dominate, in contrast to bigger, gasoline engines in North America.
GM can now redirect engineering resources to focus mostly on its core U.S. lineup. European crash standards feature requirements, such as pedestrian protection regulations, that are not similar to U.S. rules and inject considerable complexity into design and manufacturing. GM will still have to create vehicles for China, which closely follows European emissions standards, but those are already close to U.S. standards for gasoline engines.
So, without the need to engineer and build vehicles that use different parts and different software, GM appears to have at least partially solved a problem vexing the entire industry: a critical shortage of engineers.
Without having to worry about developing vehicles for Europe, GM should be able to reduce product development cycles and budgets, since fewer vehicles will tie up the company’s resources and management manpower.
Cadillac validated the redesigned 2014 CTS midsize luxury sport sedan at Germany’s Nuerburgring.
It’s not yet clear what will happen to the vehicles sold in the United States that use components made by GM’s European operations. If Opel retains a plant in Szentgotthard, Hungary, for instance, then it will be a supplier to GM for the 1.6-liter diesel engine, which is just now launching in the Chevrolet Cruze, and the entire powertrain in the Buick Cascada. The redesigned Chevrolet Equinox also uses the 1.6-liter diesel engine.
With Opel retaining GM’s European design center at Ruesselsheim, Germany, GM loses something it should probably keep: a European design perspective. American consumers like European cars, and many design trends begin in Europe.
My biggest fear with the deal is that once GM retreats from Europe, it will begin to forget why European cars are engineered so differently than vehicles designed for the United States and Asia.
A car sold in Europe has to be safe and stable at speeds far higher than anywhere else. Automakers in Europe have to figure that the cars they design here could end up on the Autobahn and be driven at high speeds, which is one major reason why European cars have routinely out-handled, out-braked and steered far more precisely and predictably than vehicles developed elsewhere.
Many of GM’s most highly regarded vehicles, nearly all new Cadillacs, the Chevrolet Camaro and Corvette, etc., were honed on Germany’s Nuerburgring.
If GM becomes a stranger there, then it may be time to start worrying.
You can reach Richard Truett at email@example.com.