Editorial: GM Can't Read

Did we say the Opel sale is getting messier and messier? GM seems to be in urgent need to attend remedial reading class.

There is the German government making noises that if GM doesn’t say “Ja” to Magna, the government can’t guarantee that another suitor gets loan guarantees. Which in German means, they won’t. GM can’t read the writing on the wall.

Then, GM wants a buyback clause. RHJ happily wants to give one. The German government says: No way. GM can’t read the writing on the wall.

Then someone leaks a supposedly confidential analysis that says that all bids are no good. The specter of bankruptcy is being raised. GM can’t read the writing on the wall. Magna immediately sweetens their bid. RHJ, GM’s darling, does nothing. GM can’t read the writing on the wall.

Now John Smith, GM group VP (and GM’s chief negotiator for the sale of Opel), goes on GM Europe’s website and writes with a supposedly straight face, “despite media reports to the contrary, GM has NOT specified its preference for a bidder.” They did not?

The German government sure thinks GM has a preference: RHJ. According to Der Spiegel, John Smith just received a letter from the German government in which he is reminded that the “loan guarantees come with conditions.” The letter was prompted by John Smith telling the German government that he prefers RHJ. GM can’t read the writing on the wall.

Just in case anybody missed the fact that GM can’t read the writing on the wall, John Smith clearly spells out a preference in the same post on the same website.

He word-smiths that the Magna bid “contained elements around intellectual property and our Russian operations that simply could not be implemented. GM has partners in other parts of the world who have joint ownership of these assets . . . we simply could not execute the deal as submitted.”

Supposedly, “discussions with Magna continue in earnest to resolve these challenges.” Yeah, sure.

What about RHJ, for which GM supposedly has no preference? Smith gets excited: “The bid from RHJI is completed and would represent a much simpler structure and would be easier to implement. It would require less monetary participation by the government and would keep our global alignments solid, while still creating an independent Opel/Vauxhall organization in Germany. This remains a reasonable and viable option to be considered as the very difficult issues around the Magna negotiations continue to be worked.”

Does this still sound like no preference?

GM either can’t read the writing on the wall. Or they just aren’t interested in selling Opel. They also are totally ignorant of German politics.

Germany is heading into an election in September. Economy Minister von und zu Guttenberg had opposed an Opel bailout since day one. Guttenberg still “cannot rule out an Opel bankruptcy,” writes the Manager Magazine. This position made the baron from Bavaria the darling of the people. Guttenberg just advanced to Germany’s most popular politician, before chancellor Angela Merkel. Even the Social Democrats, who are indicated to lose the elections by a landslide, don’t want to touch the hot potato Opel more than absolutely necessary.

GM quickly needs to find their glasses and read what it says in big letters on the wall: “No RHJ. No buyback option.” If they don’t, and especially if the matter is not settled until the elections, German politicians will remember what is recommended as the best prevention against swine flu: Wash your hands. Of the Opel mess.

If that happens, Berlin saves billions in loan guarantees. Opel goes bankrupt. Then, BAIC might get Opel after all. For real cheap.