Opel Watch: GM, Germany and the Gordian Knot

Edward Niedermeyer
by Edward Niedermeyer

GM is stepping up efforts to retain some control over Opel this week, as political pressure builds to find a solution before German elections on September 27. GM sources told the Wall Street Journal that Spain, Britain and Poland would jointly contribute “about €1B” towards repaying a German government bridge loan. Should the nationalized American automaker pay off the note, they could then sell Opel to their “preferred” third party buyer option, RHJ. The private equity fund dug around in the couch and came up with another €25M, raising its offer to buy Opel from GM to €300M. Coincidence?

RHJ backers may have been “inspired” by GM’s desperation to sweeten the pot, but it isn’t likely to make much of a difference. Magna’s bid is worth €500M (€350M in upfront equity). Job cut estimates—an important element for Germany’s strong labor unions—are about the same for both bids. Add the German government’s repeatedly-stated preference for Opel, and it’s obvious that RHJ’s extra ante is too little too late.

GM’s fund raising efforts with European governments who just happen to host Opel plants is of considerably greater consequence. German government sources tell Dow Jones that they consider GM’s extort—uh, negotiations—“legitimate.”

In fact, DJ reckons GM could end up with a majority stake in Opel. GM sources tell the Wall Street Journal that GM could put as much as $1B of “its own money” down to keep Opel all in the family. Just to clarify, that would be American tax dollars going to save Opel.

But not if Klaus Franz has anything to say about it.

“It’s not enough with just 1.5 billion or 2 billion euros,” Opel’s union boss tells Automotive News [sub]. “In order to pay back the bridge loan, GM needs to come up with $2 billion, and then there would not be a single cent left to invest in new products or restructuring the 25 to 30 percent of over capacity.” And one more thing. “The employees want to make sustainable contributions but not if we should return to 100 percent control under GM.”

But German Chancellor Angela Merkel has more than just feisty unionists to worry about. She’s also under fire from her own center-right party. “Should GM not want to sell Opel, then we will demand back our bridge financing of 1.5 billion euros,” CDU Parliamentary leader Volker Kauder said. “We can only remind GM’s leadership once again that they should stick to the agreement reached a few months ago and negotiate a contract with Magna.”

Meanwhile, even the EU is giving GM’s divide-and-conquer strategy a thumbs down. “We still have to see the details, but you cannot make state-aid conditional on localizing an investment in a particular country,” explain the European Commission’s competition arm via spokesman.

“The employees want to make sustainable contributions but not if we should return to 100 percent control under GM,” says Klaus Franz, head of Opel’s union.

Of course, Carl-Peter Forster, General Motors Europe president, is hedging his/your bets. Automotive News [sub] reports that Forster . . .

believes Magna International Inc. is most likely to win a bidding battle for Opel, but he says that the carmaker could also thrive under the ownership of its US parent.

“Magna is the most likely for me because all conditions have been met, the contracts have been negotiated and the financing is in place,” Forster told the Die Welt newspaper.

Expediency über alles, ja?

Edward Niedermeyer
Edward Niedermeyer

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  • Srynerson Srynerson on Sep 04, 2009
    Where did GM find 1 billion euros? Every time there's a recall, they check under the seats for dropped change and put it in a jar....
  • Joeaverage Joeaverage on Sep 07, 2009

    Delay tactics. I wonder if GM is delaying so they hope enough time passes that either they will have enough of their own money (tax money) to keep Opel or enough time will pass that they can ask the US gov't for another handout. I agree GM should have been split up to become competing companies. Pontiac vs Caddy vs GMC vs Chevy vs Saab vs Saturn. It might be a good solution for a possible cultural problem than a question of enough real expertise at GM. Too many folks keeping their jobs or getting promoted based on their ability to negotiate corporate BS (i.e. kiss up to the right people) than advancing based on real merit. In other words perhaps the good people aren't getting recognized and thus alot of good ideas get passed over. Breaking up GM would put the fear of some deity above into them and get them busy. No more of this product hierachy BS and more of building the best vehicles they can. Maybe they would shed some of the expensive managment and get back to being a car company building interesting cars that don't need HYPE and GREENWASH to sell them and more like Honda products that just have a good rep. I hope if Opel gets sold that they can just bring their products here without going through the GM blender first. I'd like to see more Astra like products that get promoted and have enough future that I'd feel good about owning an Astra for a decade knowing I can get parts for it when I need them. Saw only my SECOND Astra over the weekend and only the first in this town. Was a low spec four door. The first Astra I saw was at Christmas in Chattanooga. It was a high spec two-door. No local promotion and not enough of them on the road to be self-promoting.

  • John The answer is to wipe it off? I don't recall ever having to "wife off rust" in any car I've ever owned. Well... once a year claybar for rail dust maybe.
  • Scott What people want is the Jetson Car sound.This has come up before.
  • Joerg I just bought a Corolla Cross Hybrid SE a few weeks ago, and I regret it. But not for any of the reasons stated so far. It drives well enough for me, gas mileage is great for a car like that, the interior is fine, nothing to complain about for normal daily use. I bought this relatively small SUV thinking it is basically just a smaller version of the RAV4 (the RAV4 felt too big for me, drives like a tank, so I never really considered it). I also considered the AWD Prius, but storage capacity is just too small (my dog would not fit in the small and low cargo space).But there are a few things that I consider critical for me, and that I thought would be a given for any SUV (and therefore did not do my due diligence before the purchase): It can’t use snow chains per the manual, nor any other snow traction devices. Even with AWD, snow chains are sometimes required where I go, or just needed to get out of a stuck situation.The roof rack capacity is only a miniscule 75 lbs, so I can’t really load my roof top box with stuff for bigger trips.Ironically, the European version allows snow chains and roof rack capacity is 165 lbs. Same for the US Prius version. What was Toyota thinking?Lastly, I don’t like that there is no spare tire, but I knew that before the purchase. But it is ridiculous that this space is just filled up with a block of foam. At least it should be made available for additional storage. In hindsight, I should have bought a RAV4. The basic LE Hybrid version would have been just about 1k more.
  • MaintenanceCosts Looks like the best combination of capability, interior comfort, and subtle appearance can be achieved by taking a Laramie (crew cab, short bed, 4x4 of course) and equipping it with the Sport Appearance, Towing Technology, and Level 2 packages as well as a few standalone options. That's my pick.Rebel is too CRUSH THAT CAN BRO and Limited and up are too cowboy Cadillac.
  • Xidex easier to buy a mustang that already sounds like that. love the coyote growl