GM issues a 'No-Decision' on fate of Opel, German government not happy
General Motors was meant to decide who would be the winning bidder for Opel last Friday. But it didn't. Instead, GM asked the German government for more information on federal financial assistance available to buyers. The German government would like Magna to take over Opel as it vowed to retain a huge chunk of jobs in Germany, but GM has given every indication of preferring Belgian investment fund RHJ.
GM wants to know how much money RHJ would get in case it was chosen to buy Opel. It looks like GM still has issues with Magna buying Opel and is looking for a way to choose RHJ and save at least a little face with the German government. If RHJ can get an attractive financial package from the feds, it can also save more jobs than it might be inclined to otherwise, and GM doesn't have to worry about Russian competitors using its own technology.
The German government wants none of it, though. It has called on the United States government to get GM to make a decision. That isn't likely to happen, but it shows how intense things are with Opel, politicians, labor and upcoming elections. On a side note, the BBC reported that part of GM's plan could include a buy-back option for Opel, which, if true, would probably make a lot more sense for RHJ than Magna.
[Source: Auto News, sub req'd]
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Reader Comments (Page 1 of 2)
Avinash machado 8:07AM (8/24/2009)
Considering that GM has owned Opel since the 1920's it might be hard for them to let go of Opel.
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MAXLD 8:37AM (8/24/2009)
GM doesn't want a buyer, they want a temporary babysitter. Unlike Fiat, both Magna and RHJ offer more chances to keep Opel close to GM in therms of technology and business agreements. The difference is that RHJ, being a financial group, it doesn't give a damn about Opel itself... all they see here is numbers and they will easily sell it back later if that makes them a profit.
With Magna the thing is a little bit harder to deal with, because it's best chance of the German government to keep the company in the country and maintain the jobs there. But it has a Russian partner that may benefit and GM doesn't want that...
After all, I think Magna will be the better option to Opel. It has technology experience and a plan to the future. But, although we don't what would happen if Fiat took Opel, I think I would be even happier... it would finally get rid of GM. Fiat has one good thing that Opel would cleary benefit: good and new engines. The new Insignia and Astra models are so much more advanced than the older models, but they are being equipped with basically the same old engines that don't have a very high reputation. It's the only thing Opel needs to be considered a more premium brand... and GM clearly can't offer that.
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falcon5768 8:49AM (8/24/2009)
There is also the Saturn factor. GM wants strict measures in place to keep Open vehicles out of Penske's hands once their current agreement is up, and Magna balked at that from whats been rumored.
Thats in part why Penske is dealing with Renault now for Saturns future vehicles, but all indications where that he wanted to keep the euro-german influence instead.
william tell 11:29AM (8/24/2009)
"Fiat has one good thing that Opel would clearly benefit: good and new engines".
Fiat already supply diesel engines (2.0) to Opel and with the exception of the twin turbo version due imminently on the insignia which IIRC is developed by Saab, these diesels are some of the worst on the market. No way near as refined as the VAG or PSA/Ford units. The "new" 2.0 is really an evolution of the old 1.9 unit found in the Vectra.
MAXLD 12:19PM (8/24/2009)
Maybe true, but VW engines are not as good as they used to be, although better than Opel ones.
Opel benefited from the GM/Fiat share of technologies a few years ago, 1.3 CDTi, for example, implementing their own details and modifications even today. But, now they need to keep up and that will be a problem in the next few years.
Latest 1.7 CDTi engines provided by Isuzu were not bad but they were not as good as the old ones. The Isuzu 1.5 in the Corsa A and B was like a tank, very reliable and very high mileage. It was the best in the class.
Today they don't have a specific very good engine, and if we take a look to the petrol ones... it's like a desert, they're all just average, with no real excitement. Since the Twinport implementation, there's nothing really new and special about the 1.2 and 1.4, and they are not really a reference in the class, they have no major strong points. There are some new low emission models (ecoFlex) but are nothing but cars with teaked (longer) gearboxes to reduce acceleration... which is basically making the performance even worse. No new technologies, just little cheats.
We may argue the best engines out there, but one thing that we have to agree is that Opel (going outside GM) will need new engines for the future... and it's not probable that they will develop them alone.
Richard 1:48AM (8/25/2009)
Wilhelm, I'd like you to know that the NPD party leadership would like to commend you on your actions and brave words.
However we would also appreciate it if you were to be a little more discrete: given that VW has an eight-year technological gap with the French HDi and dCis, but most especially with the Fiat mutlijets, if you were to go a bit easier with your words then someone may even just fall for it..........
tfinnegan 9:09AM (8/24/2009)
It was my understanding that if GM chooses RHJ, it gives GM the option to buy back Opel once they get themselves together again whereas a sale to Magna is permanent with no buy back option. I would agree that GM is having a hard time letting go of Opel and that would explain a large portion of the bias toward RHJ...the option to get it back.
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Nixapatfan 9:16AM (8/24/2009)
The German Gov is pissed because GM won't let them play politics with their intellectual property. Only reason why the Germans want the Magnan deal is so they can sacrifice GM/Opel to Russia so they can secure an energy deal, it isn't about what's best for Opel it's about what's best for Germany. It would be awesome if GM was able to secure DIP financing stateside and then shutdown the factories there and export from here.
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MAXLD 12:35PM (8/24/2009)
The only politic they are playing is the jobs one. The German gov. does not want to be loose those factories and jobs. They contribute for the balance and German economy. Magna is the best deal for them because it's the one that promise to maintain those jobs. Otherwise, it wouldn't really matter. That's why Fiat lost... they were planing to cut too many jobs and too many factories.
Also, that energy deal with the Russians will be done anyway.
GM is not stupid, they have a major market share in Europe with the Opel/Vauxhall brands... that's also why they want a "buy back later" opportunity... they know that they are loosing one of the best and most successful brands of GM group. They would never get/maintain the same market share with those crappy Chevrolet cars they are trying to sell here.
Val 3:53PM (8/24/2009)
Hm, magna has said it intends to try to keep the jobs. There is no mention of how long. My guess, till the government aid runs out. In any case, manufacturing cheap cars for the huge russian market (which was quite big last year, but with the economy hit much worse than the US, probably no longer the case) in GERMANY of all places, is veeery unlikely. Their only chance for profit is to make the cars in russia. And the thing ybout the energy deal is still there, and germany is interested in keeping the jobs ONLY because of the coming elections. Otherwise, i don't know if any other private company would get such aid, if it weren't a few months before the elections.
Richard 1:42AM (8/25/2009)
Jobs have nothing to do with this. At least not the total number of jobs. These are currently the same and totally lack credibility anyway, in Magna's case, seeing how they added an extra 3000 job losses to their total just a few seconds after kicking Fiat out of the picture.
German job losses is however relevant, but only in a totally hilarious way: to think that the workers in Spain, UK, Belgium and Poland are simply going to take the German plan sitting down is more that a little absurd (what's more knowing that they do a better job while costing the company half as much or even less).
Even Germn job losses, however, paleinto insignificance here compared with the only real main issue: shifting Opel control to Germany.
MAXLD 11:42AM (8/24/2009)
Breaking news: the Council of Opel workers are considering to take action against GM due this situation. Not sure about the details...
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CamO 9:31AM (8/24/2009)
Well I have to say as someone who origianlly was really excited at the prospect of a great Canadian company taking a leadership role in OPEL...my opinion has completely changed.
I don't blame GM for not wanting to give up a division that has been profitable and currently has one of the largest product design and innovation centres in the (former) GM family.
They've put a lot of money into OPEL and don't want that going to fund a new competitor.
The Russian connection makes this deal even less appealing. How many westerners have completely lost their shirts in dealings with Russian partners??
I hope GM saves Manga from itself and just takes the RHJ deal.
Maybe we could find a Canadian source for that Billion dollars Mr Stronach want's to spend so badly-Or maybe he could try to buy Volvo from Ford.
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imoore 10:20AM (8/24/2009)
You are correct. GAZ is one of Magna's partners in the deal (and they own a small part of Magna, too). GAZ bought British van maker LDV in 2007 and ran it into the ground. LDV is now shut down, and the government administrators are still trying to decide what to do with it.
Also, not all Germans are pleased with the deal. Volkswagen recently told Magna that they could not own a rival automaker, Opel, and continue to make parts for VW, so they have told Magna they will no longer use them as a vendor if the Opel deal goes through. Plus, Magna builds vehicles for Mercedes, Chrysler and Aston Matin (Rapide) under contract, so I'm betting they aren't happy with the Opel deal, either.
At this point, It would be best to spin off Opel as an independent company, with GM and the German government as minority shareholders and Opel management and employees owning the rest.
JMF 9:45AM (8/24/2009)
GM has issues with their selling European "intellectual property" but has listed no problem(s) whatsoever with selling North American "intellectual property" to China?
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Nixapatfan 10:10AM (8/24/2009)
Hummer is based on all old platforms that aren't going to be useful in meeting future CAFE standards where as Opel uses GM's most recent and most critical platforms such as Gamma, Delta2, Epi2, Theta2 they can't let the Russians have free access to that and then have the Russians compete against GM in Russia and eastern Europe which is predictaed to grow significantly.
info 10:28AM (8/24/2009)
One major factor missing in this discussion is the fact that for Opel to survive, they need financial help from the German government, similar to the bail out funds received by GM and Chrysler. Does GM or anyone else, for that matter, really expect support of a sale to RHJ with the distinct possibility of a sale back to GM later on?
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CamO 10:47AM (8/24/2009)
Why exactly would the German government be apposed to GM eventually taking OPEL back completely?
GM has owned the company since WW2 and has helped it become a integral part of an multi-national company.
I'm hopeful that GM will be able to be in a position to reacquire OPEL completely in the near future.
info 11:15AM (8/24/2009)
For the simple reason that the German government is not in the business of enabeling US companies to meet their business goals with German taxpayer money.
Val 4:02PM (8/24/2009)
But the german government is obviously in the business of giving taxpayers money to russian mobsters... interesting enough, they said many times they would give opel a loan, as long as the money didn't leave for the HQ in detroit, but they have made no such demands from Magna and GAZ. Magna has a 200 mil loss last quarter, nobody probably knows how bad gaz is, since it is owned by a single person and a state bank.