Tax Row Puts Opel Bailout Further In Doubt

Bertel Schmitt
by Bertel Schmitt

German newspaper Die Welt had reported on Saturday that GM and Opel seems to be preparing for insolvency at Opel, having hired three law firms with renowned insolvency experts. GM denies the report, writes Reuters. “This scenario is currently not on the agenda,” a GM Europe spokesman told Reuters on Sunday. Note the careful usage of “currently” and “agenda.”

Die Welt says GM Europe would be advised by Baker & McKenzie as well as Clifford Chance, while the management of Adam Opel GmbH had hired Heidelberg-based firm Wellensiek. GM doesn’t deny that they have hired counsel: A GM Europe spokesman said the company had hired the firms to assess the effect of potential restructuring measures. Meanwhile, there is growing outrage in Germany about the fact that Opel never paid tax in Germany because it transferred profits to its U.S. parent.


This according to unnamed members of the German cabinet. “It cannot be that the German taxpayer has to save a company that transfers its profits to the United States,” Michael Fuchs of the Christian Democrats (CDU) told Bild am Sonntag. According to a report by Die Welt, it’s even worse: Opel paid €19.5m in taxes, but received a tax refund in the amount of €48.5m

A GM Europe spokesman did not comment on the reports but said the company had invested several billion Euros since 2002 in the expansion of Opel’s four German sites, a great deal of which went into the Ruesselsheim plant, near Frankfurt, where Opel has its headquarters.

The tax imbroglio doesn’t help Opel’s chances to get government money. The German cabinet is clear on one aspect: The submitted business plan is not enough. Government spokesman Thomas Steg said: “It is totally clear that what Opel has put on our table is totally inadequate as a basis for a decision. A decision will take weeks, until end of March at least.” Pushing Opel further down the road to insolvency.

Here some tidbits from Berlin (courtesy Reuters:)

Finance Minister Peer Steinbrueck told students in Bonn on Monday he would be “very reserved” with regard to state aid for Opel, and that Opel management had not yet provided the government with an adequate concept for the carmaker’s future.

Chancellor Angela Merkel has left open the possibility of granting Opel state aid, but last week she told fellow Christian Democrats that the carmaker is not systemically crucial to the German economy, a party official told Reuters.

Interior Minister Wolfgang Schaeuble said in a newspaper interview on Friday that insolvency could be an option for Opel though it need not mean the carmaker going bust.

Foreign Minister Frank-Walter Steinmeier, who will lead the SPD’s challenge against Merkel in the election, has branded Schaeuble “irresponsible” for bringing up potential insolvency.

An Economy Ministry spokesman said the government was not preparing a change to German insolvency law to help Opel.

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Dzwax Dzwax on Mar 09, 2009

    Too big to be accountable

  • PeteMoran PeteMoran on Mar 09, 2009

    @ dzwax Too big to be accountable Absolutely spot on! You gotta' wonder if anyone can get their head around the incompetent mess that is GM. @ Kurt I was under the impression GM created and consolidated all it engineering. I'm a bit out-of-touch with present day Holden, but I believe it's still a self contained engineering unit here in Australia.

  • Analoggrotto Kia EV9 was voted the best vehicle in the world and this is the best TOYOTA can do? Nice try, next.
  • 3-On-The-Tree 4cyl as well.
  • Luke42 I want more information about Ford’s Project T3.The Silverado EV needs some competition beyond just the Rivian truck. The Cybertruck has missed the mark.The Cybertruck is special in that it’s the first time Tesla has introduced an uncompetitive EV. I hope the company learns from their mistakes. While Tesla is learning what they did wrong, I’ll be shopping to replace my GMC Sierra Hybrid with a Chevy, a Ford, or a Rivian — all while happily driving my Model Y.
  • 3-On-The-Tree I wished they wouldn’t go to the twin turbo V6. That’s why I bought a 2021 Tundra V8.
  • Oberkanone My grid hurts!Good luck with installing charger locations at leased locations with aging infrastructure. Perhaps USPS would have better start modernizing it's Post offices to meet future needs. Of course, USPS has no money for anything.
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