GM Announces Major Shakeups In European, Australian Operations

The past two weeks have been a whirlwind of news for General Motors GM.

Not only has the automaker emerged from government bailout and named its first female CEO, it's also been announcing some dramatic changes to its international operations.

On Thursday, GM said it was selling its entire seven percent stake in France's PSA Peugeot Citroen – part of a strategic alliance set up between the two car-makers to weather the ongoing economic eurozone crisis.

“Our equity stake was planned to support PSA in their efforts to raise capital at the time of the creation of the GM and PSA alliance, and that support is no longer needed,” GM Vice Chairman Steve Girsky said in a press statement. “The alliance remains strong with our focus on joint vehicle programs, cross manufacturing, purchasing, and logistics.  We’re making good progress while remaining open to new opportunities.”

That being said, Peugeot is reportedly looking eastwards towards its Chinese partner, the state-run Dongfeng Motor, for additional investment and assistance.

The news regarding Peugeot comes just days after GM unveiled other major changes in its European operations – ending the sale of its Chevrolet brand in Europe, while bolstering its Opel and Vauxhall lines in the region and expanding the presence of Cadillacs in the market.

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The company cited the “challenging business model and the difficult economic situation in Europe” as the driving forces behind its changes.

“Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac,” GM Chairman and CEO Dan Akerson said in another press statement. “For Chevrolet, it will allow us to focus our investments where the opportunity for growth is greatest.”

GM points out that most of the Chevrolets sold in Western and Eastern Europe are produced in South Korea – a factor that may come into play in another major market, Australia.

Earlier this week, GM said it would stop manufacturing vehicles and engines in Australia by the end of 2017. That includes sales of GM subsidiary Holden – a car line with Australian roots dating back to the 1850s, and whose closure would effectively end Australia's domestic auto industry.

GM's Akerson blamed the Australian decision on a “perfect storm of negative influences the automotive industry faces in the country, including the sustained strength of the Australian dollar, high cost of production, small domestic market and arguably the most competitive and fragmented auto market in the world.”

But the company's halt of manufacturing in Australia is also prompting speculation that GM may soon start shipping its South Korean-made vehicles to Down Under.