GM Mortgaging China to Save Opel?

Edward Niedermeyer
by Edward Niedermeyer

There’s some surprising news in Automotive News [sub] today in GM’s ongoing attempt to save Opel (and, more importantly, its intellectual property). Since the German Government shot down the only proposal that would keep Opel IP with GM, the General is scrambling to prevent its erstwhile German arm from falling to Magna and GAZ/Sberbank. But who on earth would give GM the $4 billion it needs (now) to keep Opel on board the mothership (for the moment)? Surely only the American taxpayers are that gullible! Unfortunately for GM, there’s a catch. Automotive News explains:

Because GM is barred from using funding from the U.S. government from its reorganization in bankruptcy to support its international operations, one of the options could include raising money by selling or mortgaging the automaker’s assets in China, one of the sources said.

Ruh-roh! China is widely acknowledged to be GM’s saving grace. The General enjoys a long-term presence and favorable brand image in the world’s largest and strongest market for cars, and it could be argued that Chinese profits kept GM from gong bankrupt years ago. On the other hand, Opel’s sales fell more than ten percent in 2008, part of a sales erosion that dates back years. The problem? GM’s recent $9 billion investment in Opel (current status unclear), $6.5 billion of which was planned for new product development. Much of that money presumably generated products and platforms that GM is counting on to fill out its global portfolios. If all that IP goes away though (and again, that “if” is based on how much of that investment was made before GM’s bankruptcy), GM could be forced into greater dependence on its less-lauded Daewoo division to develop global products.

What’s a multinational to do? GM could probably find plenty of offers for loans backed by GM China assets, but only because the assets are valuable and the risk of GM eventually defaulting are high. Losing China to save Opel would be GM’s final epic blunder, but losing a major source of future product development and IP won’t be good either. GM is so not out of the woods, it isn’t even funny.

Edward Niedermeyer
Edward Niedermeyer

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  • Wsn Wsn on Aug 26, 2009

    A more realistic way for GM, is to find a rich Chinese partner and buy Opel. That way GM still has 50% and the Chinese partner will need GM's expertise in running the company. Just like GM-SAIC.

  • Christy Garwood Christy Garwood on Aug 26, 2009

    FYI jerry weber from GM employee communications sheets: 2010 La Crosse EPA/Powertrain: 3.0 & 3.6 Engine dual overhead cam, direct-inject 6 cylinder engines fuel-conserving six-speed automatic transmission: 27 hwy/18 city MPG Available Late 2009 - Ecotec 2.4L Four-cylinder engine - 30hwy/20 city MPG

  • Rando [h2]Coincidentally, the Rolls-Royce Cullinan is more than $41k as well -.-[/h2]
  • Ajla "Gee, wonder why car (as well as home) insurance rates are much higher in places like Florida..." Severe weather is on the list but even if a benevolent genie reverted the climate to circa 1724 I think FL would still have high cost. Our home insurance rates have increased 102% since 2021 and I don't think weather models account for that much of a change in that period. Florida's insurance assignment of benefit regulation meant that it had ~80% of the country's of the insurance lawsuits on ~12% of the nation's claims and litigated claims can be expensive to insurance companies. The state altered some regulations and is having some success on getting more companies back, even with the severe weather risks, through relatively bipartisan efforts. With car insurance just beyond the basic "Florida" stuff, the population increase of the past few years is overwhelming the roads. But, I think the biggest thing is we have very low mandated car insurance levels. Only $10K personal injury and $10K property damage. No injury liability needed. And 20% of the state has no insurance. So people that actually want insurance pay out the nose. Like I commented above my under/uninsured coverage alone is 2.5x my comprehensive & collision.
  • Juan Let's do an 1000 mile drive and see who gets there first.
  • Eliyahu CVT needed for MPG. Outback is indeed the legacy of, err, the Legacy.
  • Gayneu I can comment on these. My wife always thought the Minis were "cute" so I bought her a used 2005 (non-S, 5 speed) for one of her "special" birthdays. She loved it and I kinda did too. Somehow a hole developed in the transmission case and the fluid drained out, ruining the car (too expensive to fix). A local mechanic bought it for $800.We then bought a used 2015 S (6 speed) which we still have today (80k miles). Her sister just bought a used S as well (also manual). It has been a dependable car but BMW-priced maintenance and premium gas hurts for sure. I think the earlier generation (like in the article) were better looking with cleaner lines. The 2015 S rides too stiff for me (Chicago roads) but is a hoot on smooth ones. It does seem to shift weird - its hard to describe but it shifts differently from every other manual I have driven. No matter how hard I try, so won't let go of her Mini.