3 Reasons Why GM May Have To Give Up On Opel

Opel is a heralded name in Europe and a vital part of  GM�s history. Opel helped GM grow in Europe and stay on its feet in the early 1990s. Its products fueled GM�s evolution from a U.S. focused company into an international player.

But for more than a decade, Opel has faced one crisis after another. Yet another turnaround attempt is underway, as GM is expected to announce its second-consecutive annual lossin Europe next month.

And now, it�s time for GM to think hard about whether it�s time to give up.

Despite all its efforts, GM hasn�t found a way to make Opel work, and Opel is no longer as necessary to GM as it once was.

I say this with the deepest respect for the talent at Opel. Over the years, I�ve paid many visits to its headquarters in Russelsheim, Germany, and its plants in Bochem and Eisenach, to name a few. Opel helped me understand the car business, and it has taught GM a lot, as well.

Certainly, some people believe GM must be a viable player in Europe. Steve Girsky, the GM vice chairman who�s leading the latest Opel restructuring, declares Opel is not for sale. The division has special significance to CEO Dan Ackerson, who as a board member argued against selling Opel in 2009, when Magna was willing to buy it.

But other car companies have had to face reality and step away from similar situations. Ford, which went on a luxury spending spree in the 1990s, has shed all its foreign brands. GM gave up on Saab, and it eliminated a series of brands as part of its North American restructuring.

Last week, Maryann Keller, the legendary auto analyst, told Bloomberg, �I almost see Opel�s problems as not solvable.� The question, she says, �is how do you get rid of it and still protect your intellectual property because that�s where your small-car development is.�

Here are three reasons why it�s time for GM to consider moving on.

1) It�s a distraction. With the heavy lifting of its restructuring behind it, GM needs to focus on two things: making sure its North American business stays on course, and getting the most out of its operations in Asia and Latin America. A meaningful turnaround of Opel will take yet more time, resources and money that can be devoted to bigger priorities.

Politics also plays a key role here. GM hates the nickname �Government Motors,� but as long as the Treasury holds a sizable chunk of GM stock, its actions are viewed through a political lens. Without a compelling argument in Opel�s favor, American taxpayers (and conservative commentators) are not going to be happy about seeing the company the Obama administration saved putting major dollars into fixing its European branch.