Keith Crain, editor-in-chief of Automotive News, writes this morning that General Motors’s deal with PSA Peugeot Citroen earlier this year is now looking like a money hole:
No one understood why GM got involved with PSA Peugeot Citroen by acquiring 7 percent of the company in March. Now, only a few months into the deal, it looks like GM executives made a big blunder. The weak European car market has made the value of the Peugeot stock worth less than the valuation carried on GM’s balance sheet. I hope GM executives were smart enough to stick an escape clause into their deal with Peugeot so they can put their tails between their legs and quietly slip away. It didn’t make sense then, and it makes less sense now.
Crain argues that rather than trying to fix the Opel brand, which has loyal consumers in Europe, they are pushing Chevrolet and “completely confusing customers.”
The Daily Caller’s Mickey Kaus adds: “Raising awareness of this new global brand is the reason GM is paying the Manchester United soccer team more than half a billion dollars to put ‘Chevrolet’ on their jerseys.” That’s the $559 million sponsorship deal that GM, still partially owned by US taxpayers, signed last month.
As you may recall, the current administration has made a point of touting GM’s recovery, saying: “If you are looking for a bumper sticker to sum up how President Obama has handled what we inherited, it’s pretty simple: Osama bin Laden is dead and General Motors is alive.”