OMG: An Opel Decision, Honestly?

Bertel Schmitt
by Bertel Schmitt

The increasingly active GM BOD (Chairman Edward Whitacre Jr. is even to star in a TV commercial, usually not the job of a Chairman) convened, canned the CFO Ray Young and did the unthinkable: They came to a conclusion about (their version of) the fate of Opel. Nothing is clear at the moment, but indications are it may be Magna after all.

“General Motors’ board of directors approved a course of action for its Opel subsidiary and will be communicating its recommendation to the German government, other European governments, both bidders, employees and the Opel trust board over the next 24 hours,” GM said via Reuters.

Chief Opel negotiator John Smith has been dispatched to Berlin, where, as this is written, he is briefing the trust supervising Opel and German government officials before a news conference scheduled for 4:15 p.m. local (10:15 a.m. EST).

Germany is bracing for the worst: A sale to RHJ, which is widely suspected to be GM’s patsy, or GM trying to hold on to Opel. In both cases, the Germans will most likely withdraw all financial support and recall their bridge loan of €1.5 billion.

There is already chatter about Germany wanting their money back immediately if things don’t go according to the Magna plans. “Nay, nay, we won’t pay,” is the reaction from GM. GM Europe’s Kirchner said in an e-mailed statement to Bloomberg that the loan “may not be terminated earlier in case of decision to sell or not to sell Opel to a specific investor.” No need for early termination. The loan is due in November. November is soon.

Before the press conference (and while TTAC was inconveniently down) Focus heard that the board supports a sale of Opel to Magna—under conditions. The conditions are currently unknown but may be revealed at the press conference.

Reuters keeps repeating that “Opel’s fate has become a hot-button political issue in Germany ahead of elections looming at the end of the month.” They are wrong. All sides of the political spectrum in Germany, including the unions, are favoring the Magna deal, anything else than that will become a hot button political issue for GM alone. The unions are already threatening industrial action if the decision goes against Magna, from strikes to human chains around Opel factories.

TTAC will stay on top of the press conference.

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=""> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href=""> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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 1 comment
  • Psarhjinian Psarhjinian on Sep 10, 2009

    It must be hard on GM's executives, having a directorate that actually directs and a chairman who isn't also president and CEO. They actually, you know, have to produce results now.

  • NotMyCircusNotMyMonkeys i was only here for torchinsky
  • Tane94 Workhorse probably will be added to the heap of failed EV companies.
  • Freddie Instead of taking the day off, how about an article on the connection between Black Americans and the auto industry and car culture? Having done zero research, two topics pop into my head: Chrysler designer/executive Ralph Gilles, and the famous (infamous?) "Green Book".
  • Tane94 Either Elio Motors or Aptera Motors.
  • Billccm I think we will see history repeat itself. The French acquired AMC in the 1980s, discovered they couldn't make easy money, sold AMC off to Chrysler. Jeep is all that remained. This time the French acquired FCA, and they are discovering no easy profits. Assume an Asian manufacturer will acquire what remains of Chrysler, but this time Jeep and RAM are the only survivors.