By on June 16, 2010

If you go back for what seems to be years, TTAC never gave Opel big odds for getting state aid. Ever since GM reneged on the Magna deal, their chances were pretty much nil. Since then, the German government had been subjecting Opel to water torture. A few  days ago, Berlin made it obvious. They had to, because GM was like a psychiatric patient that was slowly going through all stages of the Kübler-Ross model: Denial (“They said they would help us”), anger (“Maybe this will make your chancellor happy”), bargaining, depression, now finally, acceptance. Today, GM and Opel officially threw in the towel. Opel officially gave up on state aid. They will turn to the entity that supposedly wasn’t allowed to help them: The GM mother-ship. In other words: You and me will pay to save Opel.

Of course, GM didn’t just cry uncle.

Opel said that whole state aid business is just too slow and cumbersome. “Our application was put in more than six months ago, and we followed the process that the governments laid out and asked us to follow. We had no idea it would take this long,” Opel CEQ kvetched  in a conference call.

GM and Opel withdraws all applications for state aid, writes Der Spiegel. All of them. Opel and GM had bombarded just about anybody in Europe that had anything to do with Opel with demands for urgent help. Disregard. Cancel. We didn’t mean it. Opel doesn’t want any loan guarantees from the U.K., from Spain, from Poland, from Germany. Smart move: With the German loan guarantees denied, nobody was willing to make a useless contribution anyway.

Amazing: Opel is not changing their restructuring plan. Opel maintains that they need about €3.3b (approx $4b). They also maintain that no other plants than Antwerp will be closed and that no more than 8.300 of the 48.000 jobs in Europe will be lost. “We have no intention to change that plan” said Reilly. Time will tell. But its grist for the mills of Germany’s Economics Minister Brüderle and a host of others who had said that GM can and should do it alone.

No wonder that Brüderle is pleased: “This confirms my initial assessment: GM has the funds to restructure Opel,” said the Minister to Focus. They will need more than the €3.3b. To bring the model portfolio up to speed, €11b ($13.5b) are needed.

There are already the first doubts. Roland Koch, Premier of Hesse, where Opel has its HQ, and his Economics Minister Dieter Posch are already worried: They said the consequences of the decision are not foreseeable. That’s German for “The excrement will hit the fan.”

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9 Comments on “Opel: “State Aid? We Don’t Need No Stinking State Aid”...”

  • avatar

    — Withdrawing loan/grant applications does not mean GM will fund Opel’s long-term captial requirements. (The withdrawal is mere political theatre. Removing the applications shuts off the flow of bad press resulting from the Europeans regularly saying “No” in the media. Now there is nothing official to say no to, allowing Washington to get the Opel problem out of the public eye.)

    — Washington/GM will float Opel’s day-to-day cash needs until after the November elections, and until after the IPO. Then Washington will see what the political damage and political risks are, and go from there.

    — Washington committing US taxpayer money has always been the first step – which has yet to occur – and none of the European nations would budge until that happened. US cash for Opel might be part of the IPO package, and the Europeans will wait to see what Washington offers. (Yup, there could be a rainbow of faux good news, with smiles and handshakes all around, just in time for it to ginned up as a Success! for Washington.)

    — Personally, I’m looking for the IPO to come after the election. That way, Washington can surf til then on a steady flow of nebulous happytalk from ride-the-wave analysts and the Fed’s vast stable of in-the-tank economists.

  • avatar

    If they only need $4 billion, let’s give them $8 billion so they can be twice as successful.

    And while we’re at it, let the US taxpayer bail out Greece as well.

  • avatar

    If we pay for Opel, can we at least get their cars in a form other than softened, engorged Buicks?

  • avatar

    You will through the IMF (as the US is the single largest contributor) bailout irresponsible countries just like we bail out the irresponsible corporations here at home.

  • avatar
    Tricky Dicky

    Uhm, here’s a controversial point of view: how about the world economy gets to bail-out American-led approach to irresponsible credit?! [don’t react, I’m just trolling you]


    Opel has been under 100% ownership by GM since 1931, so if the company finds itself lacking in cash, new product and the ability to compete, how does that suddenly become an issue of American citizens having to bail it out. Through one route only – GM mismanagement and value destruction. [please react – I’m being serious!]

    The German employees at Opel have been complaining about this for years, surrounded as they are by what is ostensibly, the world’s strongest auto-manufacturers (not under American corporate control).

    I love Americans, but am well aware that

  • avatar

    This is true; free trade doesn’t differentiate between cheap Chinese goods and financing. To be honest I’d be all for it if we could get some more Opels in the US.

  • avatar

    GM should have either spun off this Opel mess or shuttered it.

    GM’s failure to have done either of the above is yet another embarrassing legacy of the bailout era.

    • 0 avatar

      Opel makes money (at least the cars that GM sells in China make money and they are mostly Opels) so spinning it off wouldn’t be wise.

      But there is a part of GM that doesn’t make money, can’t be used in the Chinese market and should be spun off (read closed). Sadly with government ownership it isn’t likely that that part will be ejected.

  • avatar

    Solly to say is becoming a dead Albatross on the neck of Government Motors.

    One servant cannot serve 2 Masters anyways.
    Doubt Uncle Sam will go bail out the Euro GM division. Perhaps put more eggs in the Middle Kingdom, or let someone from Middle Kingdom take over them, as they needed to get in EU badly to sell/build cars.

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