Opel: BAIC Is Back, GM Wants Euro Quarantine, Germany Worries About Pensions

Bertel Schmitt
by Bertel Schmitt

Representatives of China’s BAIC are on their way to Frankfurt, where they will pile in limos with the proper branding and go to nearby Rüsselsheim. There, they will receive entry to the inner sanctum of Opel: The due diligence room.

Opel will open wide and BAIC will be able to inspect books, trade secrets, business plans. The next step will be a binding offer, the Frankfurter Allgemeine Zeitung [sub] reports. In the coming weeks, BAIC Chairman Xu Heyi himself will land in Frankfurt and will present his plan to unions in Rüsselsheim and politicos in Berlin. Xu knows how to deal with the Germans. His company has a successful joint venture with Daimler.

Two items become apparent:

1.) BAIC didn’t really mean it when they announced that they had it with the foreign deals and that they are walking. This is a common stratagem in Chinese negotiations. Either the other side comes running after you. Or you go back. Or the deal is off.

2.) Berlin is getting impatient with the GM/Magna/Sberbank et al. bickering. BAIC has been a welcome bogeyman to focus the attention of the bargaining parties. The Chinese found that out quickly and said the sellers are not sincere. They won’t come back as bogeymen. Admittance to the due diligence room demands sincerity on both sides.

The winds are changing. If Magna and GM won’t get their act together, Berlin may really sell Opel to China and get it over with.

According to Automobilwoche [sub] BAIC’s first offer had been sweeter than that of Magna or Fiat. Officially, it came too late. In the meantime, public sentiment in Germany has turned against bailouts. The Social Democrats that favored Magna were handed a crushing election defeat in the EU elections, which are regarded as a test for the all-important national elections in September. If the Chinese bring money to the table, instead of Germany financing a sell-out to Russia, the deal could lead to interesting results in the polling stations.

Reuters writes that several sticking points are holding up the negotiations between GM, Magna, and the government. GM wants Opel to stay in Europe and not tread on China or the US. The German government doesn’t want to get stuck with €4 billion in pension payments should Opel go under. Smaller issues have busted deals.

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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  • Robert Schwartz Robert Schwartz on Jun 18, 2009

    "GM wants Opel to stay in Europe and not tread on China or the US." Why are GMs desires relevant. They busted. Opel is in receivership, or something like it. Why does GM get to dictate deal terms.

  • Tricky Dicky Tricky Dicky on Jun 19, 2009

    At least everyone would know up front that the Chinese would be after the underlying technology. The whole Magna deal carries the pretence of protecting German jobs but there is a much greater risk that little by little, capacity would be transferred into the deperate house of GAZ and AvtoVAZ as Russian industrial policy is executed. It's probably easier to imagine that China with their characteristic long term planning, would retain European skills in technology and marketing, to help grow a real Chinese business in addition to what Opel already has in Europe. And their cash would be real, unlike the 'elatic attached' cash that the Russians would be lending.

  • EBFlex At the summer property putting boats in the water, leveling boat lifts, cleaning the lots for summer, etc. Typical cabin stuff in the most beautiful place on the planet
  • Lou_BC I've I spent the past few days in what we refer to as "the lower mainland". I see Tesla's everywhere and virtually every other brand of EV. I was in downtown Vancouver along side a Rivian R1T. A Rivian R1S came off as side street and was following it. I saw one other R1S. 18% of new vehicles in BC are EV'S. It tends to match what I saw out my windshield. I only saw 2 fullsized pickups. One was a cool '91 3/4 ton regular cab. I ran across 2 Tacoma's. Not many Jeeps. There were plenty of Porches, Mercedes, and BMW's. I saw 2 Aston Martin DBX707's. It's been fun car watching other than the stress of driving in big city urban traffic. I'd rather dodge 146,000 pound 9 axle logging trucks on one lane roads.
  • IBx1 Never got the appeal of these; it looks like there was a Soviet mandate to create a car with two doors and a roof that could be configured in different ways.
  • CAMeyer Considering how many voters will be voting for Trump because they remember that gas prices were low in 2020–never mind the pandemic—this seems like a wise move.
  • The Oracle Been out on the boat on Lake James (NC) and cooking up some hella good food here with friends at the lake place.