While managers and union leaders of Opel and GM-Europe had a crisis summit with German Chancellor Angela Merkel and her ministers at the Kanzleramt, the drumbeat of “disentanglement” of Opel from GM picked up a steady rhythm. On Saturday, it was just whispers being picked up by TTAC from German contacts. On Sunday, it was press reports that openly discussed to jettison the Opel lifeboat from the sinking mothership. Today, everybody says it was their idea. Even Opel managers, who were just privately grumbling before, are outing themselves: “Managers at Opel would ideally like to see the unit spun-off from GM, a move which would decisively disentangle the company from the financial and political dramas unfolding in Detroit,” writes Germany’s news magazine Der Spiegel. “German politicians and union leaders like Armin Schild also support the idea. Schild declared on Monday that GM must “let Opel go free.” Free, but where, and how?
Now, it’s no longer whether Opel should be spun off. The discussion centers – in typical German fashion – on how complicated it may be, and who would be doing it.
“The two companies have become intimately intertwined,” writes Der Spiegel. “Opel develops cars for all parts of the GM empire, contributing technical know-how not only to the production of vehicles in the American and European markets but also, for instance, for the South Korean subsidiary Daewoo.” Sounds more like a problem for GM than a challenge to a liberated Opel.
Der Spiegel continues: “Further complicating a separation is the fact that prevailing market conditions would make it difficult to find a buyer.” Difficult, but not impossible. Especially with governmental prodding and financial support. If a diminutive Porsche can acquire a very healthy Volkswagen, a proper suitor can be found for an Opel at fire sale prices.
Just like TTAC, Der Spiegel is puzzled why Foreign Minister Steinmeier would be holding his own meetings with union and auto executives: “Steinmeier’s meeting has raised a few eyebrows. Ronald Pofalla, general secretary for Chancellor Merkel’s center-right Christian Democratic Party, told the German press agency DPA that Steinmeier’s portfolio does not include economic policy and that he had no business conducting such a meeting in the foreign ministry.” Ah, the wonderful world of a not-so-grand coalition.
Can’t fault Germany’s Foreign Ministry for not being quick on their feet: “The ministry countered that no branch of the economy is as internationally embedded as the auto industry.” Yeah, sure.
Later in Germany’s afternoon, Berlin started to lower expectations: “We are trying to get first-hand information,” said someone close to Frau Merkel to Die Welt. A decision about loan guarantees would not be on today’s agenda. And if the bailout won’t go down, the German government already found someone to blame: “We need to observe the European law regarding fair trade and subsidies.” It’s not us! It’s the law!
In the evening it became clear: the meeting went nowhere. Associated Press quotes Chancellor Angela Merkel saying “it is not yet determined” whether automaker Adam Opel would get loan guarantees from the German government. Even the chanceloresse bangs the disentaglement drum: “The problem here is the 100 percent entanglement between Opel and GM.” Merkel says the German government plans “further talks” and should reach a decision by Christmas. Knowing that Germany typically shuts down by mid December, and doesn’t come back from skiing or warm vacation spots before mid January, this sounds like better luck next year. And cross your fingers the mothership will be above water by then.
Opel has not been non-GM since 1928. Eighty years of full ownership means it is going to be a nasty divorce to hive off Opel.
And what of the “badged Opel” Vauxhall brand, in the UK?
What about the sales of GMDaewoo cars sold as Chevrolets in Europe?
It’s like saying “our deceased great-grandparents should have been divorced and now we’re going to break up the family and decide who gets what, 3 generations later.” Yikes.
Needless to say, this is a real warning bell for GM, since it’s obvious that GM Europe has some vitality left, and is attached like two siamese twins, to a nearly dead brother (GM North America) and leaving the two attached will kill GMEurope.
Unsure if GMDaewoo would survive but I think so, since GM don’t own a majority interest.
GMHolden of Australia, however, is wholly owned by GMNA. So if GM goes under, GMHolden gets sucked down down down too. Unless the Aussies want to try to but it off of GM.
But with a total auto market the size of New York City’s, Australia probably can’t realistically manage to keep GMHolden, Ford and Toyota going. Mitsubishi just pulled the plug on the ex-Chrysler auto manufacturing operations in Australia last spring.
I’ll say it again: disentangling Opel will be very difficult, and it’s viability going forward is very iffy. Daimler and BMW are still licking their Chrysler and Rover (failed) acquisition wounds. VW is still struggling to make SEAT viable. They need another brand as bad as GM needs another brand. Anyone else up for a wild ride with Opel?
@Paul Niedermeyer:
Here’s a wild-assed rumor: Magna.
Brian, I think Magna is pretty broke. Besides, after having GM own Opel for 80 years (excepting the few years it was nationalized by the Nazis), having American ownership taking over from American ownership might be more than German pride can take.
Daimler? Well, Opel would be a reasonable “fit” (far better than Chrysler) since they don’t overlap in any markets at all. But, does Daimler have the dough-rey-me? Doubtful.
BMW? Ditto, with the exception of the smallest Opels and the Mini. Does BMW have the cash? Um, maybe.
Porsche? Not so good. They’re already “borg-afying” Volkswagen and trying to “borg” Audi. Aintgonnahappendotcom.
What about Europeans over Canadians?
Fiat? Well – it might be possible but it makes little sense since they’re direct competitors and Fiat already has plenty of excess brands.
PSA (Peugeot-Citroen)? Doubtful. See Fiat.
How about a complete wild-card?
Suzuki and Mitsubishi merge (easily done at one level since they share a national home) and then buy up Opel. This would make for the #4 auto producer in the world, with a decent “presence” everywhere (except the increasingly irrelevent North American market in which Suzuki-Mitsubishi would be a minor player, albeit one with both a Canadian and US manufacturing base to grow from when things improve here). Suzuki and Opel already collaborate, Suzuki has some factories already in Eastern Europe, Mitsubishi has a Nedcar factory in Holland, both are building plants in Russia, and Suzuki owns part of GMDaewoo which supplies Chevrolet branded cars to Europe.
Should GM be willing to sell Opel (big if), it all depends on what’s inside the package. Vauxhall most definitely. GM might use the opportunity to get rid of Saab as well. But then it starts to get tricky. Which assets are part of the deal?
Should the package be reasonable (another big if), then I see three options:
1) The Chinese. IMHO that would be the end of Opel as well. They’re known to only be after the intelectual property. They’d let Opel die ASAP.
2) BMW
3) Daimler
BMW/Daimler are the only ones who don’t have an overlapping line-up. Every other Automaker is either not in any position for a transaction like this (Chrysler, Tata) or they’re competitors (VW, Fiat, Renault, Peugeot) or both (Ford).
Should BMW or Daimler be willing to “save” Opel, financing would surely not be the problem. The State owned banks would make sure of that.
My guess is however, that the German government will wait and see. If GM goes bust, they’ll try to find an investor who can then get Opel on the cheap. If GM gets bailed-out, Opel won’t need any help anyway (or at least not as much).
@tom: The wait&see approach is in motion
Opel/Vauxhall is not as embedded in the GM empire as Ford Europe are to the Ford empire. Vauxhall is just a brand, rebadged Opels, sold in the UK. GM Daewoo and their Chevrolet-badged korean built econoboxes has nothing to do with Opel. Saab is based on Opel platforms, but is essentially GM:s problem. Future Saabs could easily be based off any of GM:s small to mid-range cars.
I think Opel could survive as a stand-alone brand, with its current line-up intact. The German state could bail-out GM:s shares, and sell the shares on the open market.
Not as simple as some of you make out. In spite of the constant criticism of GM by this site, GM has actually made substantial progress in streamlining their products on a global basis. Case in point:
GME is the global ‘center of expertise’ for chassis Controls and active safety.
GM India is the global center of expertise for HVAC.
GMNA is the global ‘center of expertise for body modules/systems and telematics.
This results in a streamlined development process and eliminates replication of core functionality in multiple regions.
On a similar vein, GME is the development center for midsize and compact car platforms.
GMNA for luxury RWD compact utility and full size truck.
GM Korea for small car and mini car.
And so on for their other regional operations.
Similar for engine families, transmissions, etc.
Each region supports the other regions for their designated center of expertise and each region designs their assigned platforms for the other regions that are applicable for their designated platforms.
The pace of change has been rapid and economies of scale are starting to be realized.
If someone says that GM is like an ocean liner and takes forever to change – they haven’t been intimately involved over the last four years as the rate of change is constantly increasing in velocity.
Anyone else up for a wild ride with Opel?
I know this old widow that has a few Borgward shares she might be willing to swap.
maybe out of left field, but the news that GE Money AND GMAC are leaving the car floor financing business in Australia, with the consequences of the dealers looking for non existing credit, has started this trend
http://www.theaustralian.news.com.au/story/0,25197,24667525-601,00.html
It seems that the ANZUS alliance also extends to the same Goverment bailout scenarios
Specifically for GMH and Ford as the other dealers/manufacturers seem to be ok
Okay, somebody call me on this if I’m missing something.
Why must another car company buy Opel. How about spinning it off as a standalone autmobile manufacturer: each GM share gets split into some fraction of GM, some fraction of the new “Opel Motoren AG” (pardon my German).
I’d be happy to see an independent Opel — I could start considering owning such beauties as the new Insignia (ECOTY).