By on March 2, 2010

GM throws in the towel.  And throws a lot of (your, well, our) money after Opel. GM will invest a total of €1.9b into the German patient, says Das Handelsblatt today after talking to Bob Lutz. Nick Reilly confirmed the message today, and said the money can flow as paid in capital and loans from the mother-ship. It finally dawned on GM that European governments are just stringing them along until Opel runs out of money – again.

Which could happen rather sooner than later. Last Friday, Germany’s Autohaus reported that Opel might run out of cash this summer.GM wanted €2.7b from the European governments, especially from Germany. Germany balked. They never said openly “nein.” But they kicked the ball back and forth between Brussels and Berlin, in what Das Handelsblatt called “a brazen double-cross.” TTAC said various times that GM should not count on Europe’s governments of pulling their (chest)nuts out of the fire.

Don’t think we are done yet. GM had another epiphany. They finally realized what many had said before: €2.7b are not enough to survive. €3.7b sound about right , says Opel now. Which means that GM pays €1.9b, and the European governments pay (or secure) €1.8b. At least that’s how GM sees it.

GM hopes those double-crossing Germans were serious when they said that they might consider kicking in their fair share if GM kicks in the other half. Except that that half now has grown a bit. Let’s watch the next reactions out of Berlin. There seems to be a serious game of high stakes poker going on.

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8 Comments on “High Stakes Opel Poker: GM Kicks In €1.9b, Wants To See €1.8b In Aid...”


  • avatar
    Tricky Dicky

    I wonder if anyone will stick their head in here to tell us that this is an example of Ed Whiteacre kicking German butt with a well executed plan to bring GM back to greatness? My personal feeling is, there was a fair chance that Berlin would have supported the original request for help from Opel, until the rambunctious Chairman decided to insult the German Chancellor.

    I think they will get the needed support eventually, but I would not be at all surprised if the Federal Economics Ministry still made the GM hierarchy sweat a bit. The boot is certainly on the German foot. Wunderbar!

    • 0 avatar
      Cammy Corrigan

      While I like your post, I have to disagree with one point.

      I don’t think that the German government were trying to make GM management sweat. From what I’ve seen, the German government would actually like it if Vauxhall/Opel go under. There’s more political kudos in letting it fail than keeping it alive. The money saved in not bailing out GM Europe can go to other more worthwhile causes (like Greece).

      And even if Vauxhall/Opel does go under, it’s not as if there’s a shortage of competitors to fill the gap?

  • avatar
    Rod Panhard

    What did GM expect? They’ve been swaggering around as if they’re pulling in the big buck$. Talk of the IPO, paying back $6 billion in loans. So how does Germany feel about that? Well, it’s obvious. If you’re “healthy,” then you’re on your own.

  • avatar
    Steven02

    I am not sure this is GM throwing in the towel. In several of the articles that have been post here, the European nations wanted more money from GM as any part of discussions. Looks like GM is doing this.

    • 0 avatar

      GM’s position to that request had been there is no such money, what they have belongs to the U.S. tax payer, and there is no way in hell they will dump this into Opel.

      You are right, throwing in the towel is a bad choice of words. Throwing in our money would be more like it.

    • 0 avatar
      Steven02

      I didn’t think you were a US citizen Bertel, based on your locations that you post from, but that point doesn’t really matter.

      To me, this is how negotiations work. Kind of like how the unions are saying the jobs cuts don’t make sense, when in fact, they very much make sense. The question is, since now GM has put forth the effort, with the countries there now help with the financing or not like they said they would.

  • avatar
    late_apex

    <—–one pissed off tax payer! I do not support the thievery of my tax dollars to support a socialist government motors here in the US. I'm even less fond of supporting a foreign business that isn't viable!

    What good is it to kick this can down the road? If a private bank won't loan you money that means your loan is a bad credit risk.

    I hope enough of us make a stand in November and vote out these bozo's who empowered the incompetent to make moves like this.

  • avatar
    tparkit

    Anyone who ever thought the Opel “negotiations” were about anything other than securing US taxpayer cash ought to be starting to have their own epiphany right about now.

    For future analysis, a key phrase to keep in mind is “paid in capital and loans from the mother-ship”. The cash will flow into Opel by many conduits, and this multiplicity will be aimed at hiding the full extent of the money Washington/Government Motors will waste keeping Opel afloat past as many US elections as possible. Don’t for a minute believe the figure of €1.9b — the true cost will be much higher. If you want a conceptual yardstick for this sham, think Fannie & Freddie.

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