GM, Ford shares drop after sales decline in Europe

Detroit Free Press - After two days of basking in glowing reviews of the 2014 Corvette and Lincoln MKC concept, General Motors and Ford got a sobering reminder Wednesday of their continued vulnerability across the Atlantic.

GM shares tumbled $1.29, or 4.2% to $29.31 after December sales for all automakers in Europe fell 16.3% from a year earlier, based on data released by the European Automobile Manufacturers Association. Ford shares fell 0.6% to $14.22.

Both companies suffered sharper drops in their December European sales than the overall industry. GM Europe's sales fell 27.2% in December, and 13.8% for the full year. Ford's sales fell 27% for the month and 13.2% for the year.

GM CEO Dan Akerson and Chief Financial Officer Dan Ammann said Monday they aren't interested in selling their Germany-based Opel brand to PSA Peugeot Citroën. A French newspaper reported that the companies had discussed a deal in which GM would pay Peugeot to absorb the brand.

But Peugeot has problems of its own in Europe, where its sales fell 18.2% in December and 12.9% for 2012.

Akerson also said last week that GM's goal is to reduce its European losses by one-third to a half in 2013 and break even in Europe by 2015.

GM lost about $1.6 billion in Europe last year, according to Morgan Stanley analysts. The company will report fourth-quarter and 2012 results in a few weeks.

Ford expects to post a loss of more than $1.5 billion in Europe in 2012. Chief Financial Officer Bob Shanks told analysts Tuesday that Ford will lose more than that in Europe in 2013.

GM and Peugeot have agreed to share product development costs on three vehicle programs and combine purchasing and logistics operations to save $2 billion over five years. GM also plans to shutter one of its German factories after 2016. It also cut about 2,500 positions in Europe through buyouts and attrition last year.

Akerson said in an interview last week that he expects the company's fourth-quarter losses in Europe to be "just as bad as last quarter presumably," when GM Europe posted a pre-tax loss of $478 million.

"We're making progress on restructuring and if we don't see enough progress, we'll have to take another look at it," he said.

Michael Lohscheller, vice president and chief financial officer of GM's Opel and Vauxhall brands, said the company expects to slash $200 million to $300 million in fixed costs in Europe in 2013.

Still, Morgan Stanley analyst Adam Jonas has argued that GM should consider parting with Opel to end a 13-year string of losses totaling more than $16 billion.

But several GM executives told the Free Press this week that they value the company's engineering expertise in Europe.

"We have great capability there, and we're going to build on it," said Mary Barra, GM's senior vice president for global product development.