Forbes' Flint: Selling Opel "GM's Biggest Mistake Ever"

Robert Farago
by Robert Farago

Forbes former GM Kool-Aid drinker, Jerry Flint, has finally cottoned on to the fact that GM is going to hell (and not back). The Ascot-Wearing One sees today’s announcement that the nationalized American automaker is selling its Opel brand to a Canadian-fronted Russian mob as a harbinger of doom. (Substitute the words “yet another” for “a” and you’re there!) “Opel, and the cars made in Britain under the Vauxhall name, account for more than 1 million sales a year, but the operations are more important that the sales. The German unit is the heart of GM’s car engineering, and particularly the creation of front-drive cars and compact-size cars. U.S. models are derived from these cars, such as today’s Chevy Malibu.” Oh, no! No more world-beating Astras? Hang on, isn’t Daewoo engineering GM’s small cars?

Anyway, to quote Mr. Faulty, just don’t mention the war . . .

Of course, GM will have agreements; the new Opel, controlled by others, will pledge to continue to cooperate, share, coordinate and work with GM in developing cars. That’s what the agreements will say. Unfortunately, the world doesn’t work like that. The Germans will be happy to snub requests from Detroit GM, put them on the back burner and ignore requests to design with the U.S. in mind.

The Germans at Opel have been sticking it to the Americans whenever they could for years. At times they have rejected direct orders from the Detroit headquarters. One of GM’s highest executives once told me he considered the old Opel board to be “traitors.” Now the Germans have their chance to really stick it to their old owners.

They disobeyed a direct order? That doesn’t sound particularly German to me. But as much as the prospect of the Germans controlling GM’s European outposts rankle Jerry (Flint, not the Germans), the concept of Russian involvement is, apparently, worse.

My experience is that the Russians don’t take a back seat to anyone, and dealing with the Russians has been a losing game for more than one Western partner. If the deal is successful, they have been known to steal the assets through their corrupt courts.

Perhaps I have a personal grudge. I examined the Russian auto industry for Forbes magazine in 1996. Later, my writing partner, an American who headed Forbes magazine in Russia, was murdered on the streets of Moscow.

Just because Jerry’s pissed off and paranoid doesn’t mean he’s not right on this one. But he’s missing the wider point: it’s time to go. The artist formerly known as the world’s largest automaker is no longer a force with which reckoning should occur. Unless you reckon thusly:

Opel has been a money loser for GM and is shrinking, but it’s reasonable to believe that is due to incompetence.

Absolutely. But what would change—have changed—with a New GM-controlled Opel, exactly?

Robert Farago
Robert Farago

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  • ZekeToronto ZekeToronto on Sep 11, 2009

    geeber wrote: If the car is breaking down more often early in its life, what incentive is there to keep it for the long term? Firstly, keep in mind we're not talking about orders of magnitude difference in problem frequency--it's very easy to exaggerate with statistics. It's entirely possible that Europeans who buy their own cars expect a certain amount of maintenance, whereas North Americans (unrealistically, in my view) don't seem to think these complex mechanical and electrical devices should ever require any. The reason: if you buy a car with the expectation of keeping it for the long term, you're less likely to begrudge the cost of maintenance and repairs in the early years, knowing it'll be you--not the guy who buys your trade-in--who benefits. The problems with European cars tend not to be related to poor assembly, from what I’ve seen. They stem from basic engineering issues. I've been out of the business for a few years now, but I have no idea what you're talking about here. Are you perhaps including the British, French and Italian cars that I was excluding from my comments? In my life I've seen very few egregious examples of poor engineering in German and Swedish cars.

  • Ingvar Ingvar on Sep 11, 2009

    @Geeber: Right now, I'm a little bit drunk. This is the night after the boys's night out. Anyway, I'm not stupid. I understand your point. And perhaps I'm out there sometimes just to provoce a disucssion. Not every single word I say have to be taken like hard facts, ok? Well, cheerio, and hope ya'all have had as a good time as I have. And see ya next Wednesday...

  • Lou_BC Maybe if I ever buy a new car or CUV
  • Lou_BC How about telling China and Mexico, we'll accept 1 EV for every illegal you take off our hands ;)
  • Analoggrotto The original Tassos was likely conceived in one of these.
  • Lorenzo The unspoken killer is that batteries can't be repaired after a fender-bender and the cars are totaled by insurance companies. Very quickly, insurance premiums will be bigger than the the monthly payment, killing all sales. People will be snapping up all the clunkers Tim Healey can find.
  • Lorenzo Massachusetts - with the start/finish line at the tip of Cape Cod.