• by Thom Forbes  @tforbes, February 15, 2017

After years of heavy maintenance and repair bills, General Motors is looking to trade in its Opel division in Europe, where it has been for 90 years. CEO Mary Barra and president Dan Ammann are at Opel's headquarters in Ruesselsheim, Germany, this morning “exploring a potential deepening of strategic initiatives,” Reuters reports, including a sale of Opel to PSA Group, the French company that makes Peugeot and Citroën.

“A deal to sell GM’s Opel and Vauxhall brands would create Europe’s second-largest car maker, but discussions are complex and could still fall apart, people familiar with the matter said. Negotiations over price continue and GM is looking for a multibillion-dollar amount for the Opel brand, a person familiar with the matter said,” report Nick Kostov John D. Stoll and Friedrich Geiger for the Wall Street Journal.

“A sale of Opel would reduce GM’s annual volume by more than 10%, or about 1 million vehicles, and continue Chief Executive Mary Barra’s strategy of prizing profits over size,” they continue.

“Why would GM want to get out of Europe?” is the first of six questions Bloomberg’s Chad Thomas poses and answers about the potential deal.

“GM has struggled for years to turn around Opel, with losses totaling more than $20 billion since 1999. Future prospects remain challenging, given that Opel is a volume carmaker with low profit margins producing vehicles in countries with high labor costs, including Germany, Spain and the U.K. The market is also saturated with overcapacity,” Thomas tells us.

“Once a serious rival to Volkswagen, [Opel] began losing market share in the 1990s, which was also the last time it made a profit. While the Volkswagen Group has become the world’s biggest carmaker, Opel slipped to Europe’s margins,” write Jack Ewing, Chad Bray, and Bill Vlasic for the New York Times.

“In 2009, the company was on the verge of selling Opel to a consortium made of Magna, an auto parts supplier based in Canada, and the Russian lender Sberbank. But the American carmaker pulled out of the deal at the last minute, reportedly because of fear that the takeover would give the Russians access to its patents and technology,” they point out.

It also pulled out, observes Reuters’ Joseph White, because GM executives felt that “owning Germany's Opel provided the company with the engineering know-how to develop small and medium-sized cars it needed for U.S. and Asian markets. … But small cars are now losing ground in the United States, China and elsewhere to sport utility vehicles. At the same time, tougher emissions and safety regulations are making European vehicles more expensive, and harder to sell in other markets, analysts said.”

General Motors pulled Chevrolet from Europe in late 2013, you’ll recall. Then-chairman and CEO Dan Akerson said at the time: “Europe is a key region for GM that will benefit from a stronger Opel and Vauxhall and further emphasis on Cadillac.”

Cadillac launched two new models and expanded its dealer network in Europe last summer, as Nick Gibbs reported for Automotive News. But the “latest European sales target is modest compared with past goals that were never achieved,” he wrote.

“Removing Opel from General Motors’ brand offerings could, ironically, make it more attractive for GM to purchase all or parts of Fiat Chrysler, which is still actively seeking a merger partner,” writes  Automotive News’ Larry P. Vellequette, adding one big qualification. “That is, if GM were interested.”

Vellequette lays out the pluses and minuses of a combined company. GM would still have a presence in Europe, it would have the Jeep brand to nurture worldwide and the “cost-saving synergies” (aka big-time “job losses”) are obvious. But GM has spurned FCA CEO Sergio Marchionne’s overtures in the past and even though FCA’s financial picture has improved, there are other issues that make an alliance “difficult.”

“General Motors spent nearly an entire century — no, I am not exaggerating — running Opel like a crazy person,” writes Raphael Orlove for Jalopnik — and that’s one of his more restrained observations about its stewardship, which apparently was backasswards on both continents and beyond.

“People buy Opels because they’re fine. They’re just fine,” he continues. “And you know what? That’s exactly what Americans want to buy…. America does not want daring. America wants doofus-proof.

“As such, you would think GM would do nothing but shove Opels in our American faces. Instead, GM half-assed every single shot at sales here in the U.S.”

That was then. Profits are now. 

“GM’s Shares Are Surging on News of This Possible Acquisition,” the hed on Geoffrey Smith’s story for Fortune told us yesterday morning. Shares shot up 4% on opening; GM gained 4.84% on the day with a closing price of $37.24.