There are growing indications that GM’s “surgical bankruptcy” is imminent. They are already scrubbing down the surgical theaters around the world. The operation may just happen within a few weeks, and the “good brands”/”bad brands” not-so-final solution will create another mushrooming government agency that would be loath to put itself out of business. One of the many indications for rapid action: The patents tug-of-war between Opel and General Motors (or rather between the German and US governments) appears to be solved.
Bloomberg reports that “General Motors Corp. and its Adam Opel GmbH division reached an agreement on exchanging patents for debt. The accord, requiring U.S. government approval, would make up for billions of euros worth of technology that Rüsselsheim, Germany-based Opel has transferred to the parent company in previous years and protect the division in the event GM files for Chapter 11 bankruptcy in the U.S.”
The Süddeutsche Zeitung (Southern Germany Newspaper) goes into more detail. It reports that the swap became super urgent, because Opel had “sold” its patents to the mothership years ago. The invoice, however, was never paid. According to the Süddeutsche, GM is in arrears to the tune of “several billion Euro.” If GM goes C11, which the paper expects “shortly,” Opel would have to write off the receivables. Opel would have been caught both patentless and penniless and would have to close down.
The Süddeutsche says everything is cool between Opel and GM. All that is missing is a signature of the US government, which has to bless the deal. Opel management thinks that Washington will be amenable. Actually, DC should find the solution “charming” because it lowers the debt on the books of GM. Quite ominously, the usually well informed Süddeutsche adds: “Politically, Washington should have no interest in added problems concerning Opel.”
With the patent question solved, Opel can go about finding an investor. The Abwrackprämien boom and the Insignia’s success have washed fresh money into Opel’s coffers. Opel is liquid at least until August, the paper reports. “We now have time to build Opel Europe” said Klaus Franz, chief of Opel’s workers council.
Any private deal to take over Opel is likely to include some form of government help. Even with fresh money, Opel will need loan guarantees of €3.3 billion to make an engagement interesting to an investor. Both the German national government and those of the federal states in which Opel facilities are located have expressed interest in keeping the company afloat.
“How that might be accomplished is a hot-button political issue,” Deutsche Welle reports. “The Social Democrats and others have pledged that they would go so far as taking a stake in the company to rescue it from extinction. Chancellor Angela Merkel and her Christian Democratic colleagues, meanwhile, say providing preferential loans or issuing bonds is as far as they would be willing to go.”
According to Deutsche Welle, at least six investors have signaled interest in taking a stake in the company’s German-based subsidiary Opel.
“These are serious people,” GM Chief Executive Fritz Henderson said. “Many of them are financial players, some of them are industrial players. I would expect that work would get done in the next two to three weeks.” No names were named, rumors are running the gamut from sovereign wealth funds in Asia and the Gulf all the way to Fiat. Yes, Fiat. The very same that is supposedly rescuing Chrysler.
Fiat may form an alliance with General Motors’ core operations in Europe and Latin America, a source “familiar with the matter” told Automotive News on Friday. The deal would be on top of Fiat’s plan to merge with Chrysler LLC and would create the world’s second-largest auto group. No doubt with Sergio Marchionne on top. A frightening thought.
Luca di Montezemolo, the company’s chairman, quickly poured cold water on that rumor. “They’ve written about it in the newspapers? No, no,” he told reporters. As a result, “Fiat shares raced higher in relief,” writes Reuters.
In the meantime, the cutting of the umbilical cord between Opel and GM has progressed so far that even a new Opel CEO is being floated.
Reuters says that Bernd Pischetsrieder, ex-CEO of Volkswagen “could be a suitable head of a new Opel company independent of troubled US parent General Motors Corp” if an Opel dealer group in Germany gets its wish. When a new Opel company is established in Europe, it should be led by a person independent of GM, the head of German automobile retail trading group AVAG Holding AG, told Automobilwoche [sub]. AVAG is the biggest Opel dealership in Germany. Opel dealers want to participate in a rescue plan for the German car maker by taking as much as a 20 percent stake in a new company.
Pischetsrieder was chief executive of Volkswagen between 2002 and 2006. Pischetsrieder couldn’t get along with Piech, and was succeeded by Piech confidante Winterkorn. To this date, Pischetsrieder is still on VW’s payroll, but Wolfsburg would probably be happy to close that chapter also. One well placed—and obviously Winterkorn-washed—VW source said on the phone: “We wouldn’t mind Pischetsrieder in Rüsselsheim. He would make sure that Opel won’t be much of a threat.”
Patents? patents on what? Hydramatic? Electric starters? Mouse fur headliners?
When did a GM car last have anything approaching state of the art, let alone patented technology? As nearly as I can tell, the company has been technology free since Roger Smith.
How about Opel “buys” Saturn? Just a thought.
I’ve said it before (and guess what?) I’m going to say it again.
The best companies to take Vauxhall/Opel over would be either BMW or Mercedes-Benz.
If GM had boxed clever, they could have sold Vauxhall/Opel (let’s face it, they were never going to keep it for long), sparked a bidding war between BMW and Mercedes-Benz, consequently, driven the price higher and get more money in GM’s pockets.
BMW and Mercedes-Benz don’t like each other and are only working together out of necessity to drive costs down because they can’t achieve the necessary economies of scale to survive. Throwing Vauxhall/Opel into the mix of their portfolios would be the solution.
They’re both cash rich companies (for now).
They both need economies of scale to survive.
The German management would have no trouble assimilating the Vauxhall/Opel management into their team (see DaimlerChrysler on the perils of that topic).
And its would give both companies instant access to the mainstream car market globally (What Daimler tried to do with Chrysler and BMW tried with MGRover).
A management buyout of Vauxhall/Opel is unlikely (I think) and so is the scenario I’ve listed above. It’ll be a Chinese marque who will snap it up and why not?
You’re a Chinese car company who wants to expand globally but your products just aren’t good enough to export, however, GM’s products are good enough, they’re up for grabs and you’ve got deep pockets. Very simple. Thought it does beg the question….
If the Chinese have deep pockets, why don’t they use that money to make their cars safer and better….?
“Opel would have been caught both patentless and penniless”
I suppose you could say “Opel would have been caught with its ‘patents’ down”?
Doesn’t matter what they do.
The economy is broken and the government is injecting methadone.
The pain is dulled but the economy is dieing.
Buy some gold, it is down in price.
The best companies to take Vauxhall/Opel over would be either BMW or Mercedes-Benz.
Rover and Chrysler demonstrate that neither Daimler nor BMW are particularly good at playing in mainstream spaces. They don’t understand the lower- to middle-end of the market or how to do well in it.
The flip side of this coin was evident with Ford’s efforts with PAG. There wasn’t anything wrong with the concept and Ford actually did a decent job with them, but PAG proved to be a distraction that took away from Ford’s core business. The problem wasn’t with PAG, but with Ford trying to be the one running it.
Daimler and BMW are both very good at segmenting the upper-middle to high end, and at lifestyle niches. That’s where they should stay.
Fiat really would be a better fit for Opel. Fiat has room to grow, and does understand the market for cars at Opel’s price tier.
I still believe that an independent Opel/Saturn/Saab would be the best way to go. Saturn could continue selling rebadged Opels, Saab would be the premium brand. It’s a win-win.
Rover and Chrysler demonstrate that neither Daimler nor BMW are particularly good at playing in mainstream spaces. They don’t understand the lower- to middle-end of the market or how to do well in it.
The flip side of this coin was evident with Ford’s efforts with PAG. There wasn’t anything wrong with the concept and Ford actually did a decent job with them, but PAG proved to be a distraction that took away from Ford’s core business. The problem wasn’t with PAG, but with Ford trying to be the one running it.
I was just thinking about comparing management of acquisitions by Daimler, GM & Ford. Ford seems to have done the best, at least in terms of its stewardship of the acquired marques. PAG may not have made money, but Ford put a ton of money into improvements at Jaguar and Land Rover (and drastically improved their quality), and Ford didn’t mess up Volvo’s brand identity nearly as much as GM did with Saab. Chrysler, on the other hand, was gutted by Daimler. About the only thing of value that Chrysler got were the E Class parts that it used to design the 300. It was Daimler that didn’t update the Neon and instead replaced it with the Mitsubishi platform for the Caliber.
“Saturn could continue selling rebadged Opels, Saab would be the premium brand. It’s a win-win.”
Does rebranding Opel as Saturn, maker of small plastic cars, add any value? Marketing present Saturns as “German engineered” non-GM Opels might get consumers to take a 2nd look. As Shamwow Vince says, “you know the Germans always make good stuff”. Emphasize the divorce and the German connection with a name change back to Opel.
I’m not sure if BMW/Daimler and Opel would work well due to lack of synergies (RWD vs/ FWD, different niches). On the other hand Fiat/Opel would be much overlap and competing for the same costumers.
The Rover/Chrysler mergers went wrong not because BMW/Daimler don’t understand economy cars, but because the companies they merged with had the most inferior products on the market and the worst reputation. There was nothing to gain but pain. Opel at least is an average producer with a somewhat decent reputation. you can tell that by people buying them now in large numbers despite the threatening bancruptcy
@ Schwartz: probably the patents on the design. Opel has always had nice looking cars for the most part (IMHO). Other than that, they don’t have anything someone else already has. No hybrid, I think their diesel are from Fiat or some other type of cooperation (I believe when Fiat had a one night stand with GM they cooperated on diesels). All their technology is mainstream. and the parts come from suppliers anyway, who hold their own patents.
I’m not an MBA or some other type of expert on that… but apparently neither are the CEOs of the car companies. My advice is at least as good as theirs (and cheaper :-)
@Ingvar: selling Opels in the US is too expensive. and selling them at a higher price point would not work due to the bad reputation of Saturn, fears of bankruptcy etc. anything related to GM/Chrysler you only can sell with cash on the hood. At least for now and for some years.
Mercedes is a failed brand too? They no longer can compete against BMW or Audi. Don’t kill Opel by selling them to Daimler. Or they would get the same bitch slap Chrysler got. Opel/Saab as an independent company makes sense. Or sell Opel/Saab to Renault.
George B: yeah, the Saturn reputation is so bad, it might be easier to introduce “Opel” and once Saturn disappears, I’m sure the dealers would be happy to go for Opel at an instant.
(what else would they do, become Chrysler dealer? :-)
GM has to shed 4000 dealers (or if they go bust all 7000), Chrysler some thousand,… there will be plenty dealerships ready in good locations to start Opel.
However, in thsi economy, will people buy many cars, and then take the risk of the unknown?
@Ingvar; as much as the idea of a SAAB/opel merger is a purple dream, it won’t happen. SAAB isn’t a luxury brand, it is a niche brand. Opel is as guilty as GM of giving SAAB second hand platforms and restricting engine choices. Look at the new-never seen 9-5, which is already one generation behind in platforms and NOT getting the V6 twin turbo. And let’s not start on the SAAB XWD and how Opel is taking that….
The current 9-3SS is a great example. It is a really nice car — for an aging Opel — and as a Caddy BLS it would be one that I wouldn’t mind owning. But it isn’t a SAAB, despite the best efforts of a few brave Swedes.
Saturn is a much easier call; easy distribution in the US for Opel cars. The problem, it turns out, is that Americans don’t really want Opels.
Right on, Americans don’t want Opels and don’t want to pay good money for Opels sold as Saturns.
The brand has a bad image and it’s customer base is used to buying extremely cheap, simple and reliable transportation.
Our automaker is also collapsing and stagnated, there likely isn’t room for a new brand like Opel or something else taking over Saturn’s dealer network. Those customers are already fleeing to brands that we know and have established already like Ford, Honda, Kia, Hyundai and Toyota.
I don’t think Saturn has a bad image. Their key problems are that they failed to market their cars well, and priced them too high. Problem is, Opels would have to be priced nearly as high as VWs to be profitable, and people definitely won’t pay that much for them.
Rumor I heard is Jacques Nasser is going to come out of retirement to be head of the newly independent Opel/Vauxhaul.
Paris-Dakar – if that SoB gets his mitts on Opel/Vauxhall you can kiss it goodbye. He almost killed Ford. Wall Street may love him (which tells you a lot about his character), but the guy single handily took employee morale to a new low. Remember the story will Billy fired him, called a meeting to tell the troops, and they cheered!
Much as I think Opel/Vauxhall disappearing would help the other OEMs in Europe, I wouldn’t wish him on anybody.
The only thing that will keep Opel alive is the nation of Germany. They don’t do anything others don’t do better. In recent years they tried to go upscale and failed miserably. Lower on the scale they face a very stiff competition from Fiat, Renault and assorted Asians. They have always tried to compete w/ Ford Europe and lost. I guess the solution will be political. And I think a nice way to do that (though it doesn’t make economic sense it makes political sense) is to make it disappear into the VW borg. VW takes on some more wokers (key word German workers) and some factories and will have a bitch of a time not closing factories and firing people.
I think it is dead.
Unless Gm comes back from the dead and keeps it.
Separating Opel/Vauxhall/Saturn/Saab into a new company may make sense on the surface, but all it would end up doing is adding yet ANOTHER competitor in an already overcrowded-beyond-belief industry.
The end result would essentially be a European Chrysler. You’d have..
1. Very little presence outside of the home market, of which they are a significant competitor in but definitely not dominating. This leaves you wide open to economic downturns, as history as proven for Chrysler.
2. A tarnished and busted upmarket/flagship brand
3. Too small to truly stand on their own
In an alternate universe, I could have seen a Chrysler that never merged with Daimler snagging Saab and/or Opel/Vauxhall to expand outside of North America, but that ain’t the world we live in.
PAG cost Ford many tens of billions of dollars in that failed concept.
Jac Nassar… if that rumor is anywhere near true, Opel will be done. He’s a flaming F* idiot. Jerry Flint estimated in one article that Jac wasted something like 50B on his idiotic ideas.
I thought Opel was owned by GM creditors….
The US Federal Mafia is going to give them GM’s Opel assets for free AND several billion US taxpayer dollars as well…I see.
@ kaleun : “probably the patents on the design”
FYI, designs are normally covered by copyright protection, and occasionally by trademark. Patents protect new inventions. So, a new way of sealing a door might be patentable, but the general styling of a vehicle is not. Likewise, the design of stampings for a floorpan are not patentable, but a new and novel way of solving one of the challenges of floorpan design *might* be.
Protection of the look of a vehicle is, in practice, very hard to enforce. Automakers crib styling from one another with depressing regularity, and rarely win when they take it to court.
Chrysler tried to assert a trademark claim for the Jeep grill design against GM for the Hummer grill, but lost for a number of reason. A trademark is some element which the public has come to identify with a particular product or company in a particular market segment. Hummer has roots going back to AM General, which in turn has roots in the military vehicle division of Kaiser-Jeep before AMC got its mitts and Jeep and thus before Chrysler got Jeep as part of AMC. AMC split AM General off in 1982 when Renault became the majority owner of AMC and US military procurement policy frowned on buying from foreign owned companies. (My how times have changed there!) AM General later licensed all of the Hummer intellectual property (which includes copyright, trademark and patents) to GM for the commercial sales of Hummers … so, both GM and AMC had legitimate claims to using the grill typically found of Jeeps. There is more to it than that, but I’ve written too much about it already :).
GM’s shuffling of patents and cash between its US and European subsidiary companies is the kind of largely fictional nonsense which goes on inside complex multi-corporation corporations frequently. Often these games are played for tax minimization purposes, and they can be a pain to unravel when the holding company splits off some of the sub-corporations. Lawyers and accountants make a lot of money building and taking apart these largely ephemeral constructions.
The winner in all this will be…
Ford and VW…possibly Fiat.
Ford will be able to import its excellent Euro-designed products here, saving it massive amounts of development money.
VW will fill the void left by GM Europe’s demise…and it will fail if it doesn’t have an American market for its products.
@Ingvar :
Saturn could continue selling rebadged Opels
There’s ONE rebadged Opel in Saturn’s portfolio, the Astra.
Apparently it’s not a success, so why try it again?
Of course,Gm can`t float on itself. They desperately need a partner to pump out platforms which to rebadge and reskin. This is what happens when engineering capacity is depleted at home offshoring all the facilities to countries ` where they can` build things.That`s why GM will never merge with Ford, because ford is basically Mazda engines, mazda platforms and ford tins.So Gm would rather merge with mazda. But mazda would never allow it to happen. Because japanese are smart enough to understand what in American standard means `sharing technologies`. usually it would mean Japanese give all the hardware,and Americans give dealers lots, papers and promises.( did you know that Ford doesn`t have a single of her own engines from displacement up to 2.5 liters? (1.4,1.6,1.8,2.0,2.3,2.5).And Opel can survive without any problems. They have engineers, they have new car models, improved quality and bright future ahead.Now the question. If Gm wants to be profitable, it is about cars actually. So how many new platforms, engines and trannies has GM developed in last years? I mean developed. ANd GM can`t sell Oples rebadged as Saturns not because Oples are bad. because of the perception. Amercans are sick and tired of buying rebadged imports. They would rather buy a real import or real domestic car. Not a german built opel which is watered down by American beancounters.Guess how many cars could say Volvo sell if they printed on every car with big letters` Built on a japanese mazda6 platform`.Or on ford they printed` This is your Ford product, it is reliable because, the engine ,tranny, and floorpan are 100% engineered and designed in Japan
. If a ricemobile company from Korea can sell a luxury Equus from next year, but a legendary GM can`t sell a rebadged 15k Aveo, maybe the problem is …. in rebadge. Of course you can import everything, but then suddenly don`t be surprised that you are jobless and your city a rustbelt.
I, for one, wish Opel much success. Having grown up with our fair share of Rekords sitting in the Hof, it’d be a true shame if they disappeared. I really was hoping for more out of the Astra they delivered to the US (sentimental journey for me in considering buying one), but they didn’t do enough to 1) advertise/promote and 2) differentiate it from the competition. Here’s hoping that they find a way to spin themselves away from GM and set themselves up as a leading choice in the mid-class auto segment (where I always thought they played their best role).
@John Horner
GM’s shuffling of patents and cash between its US and European subsidiary companies is the kind of largely fictional nonsense which goes on inside complex multi-corporation corporations frequently. Often these games are played for tax minimization purposes, and they can be a pain to unravel when the holding company splits off some of the sub-corporations. Lawyers and accountants make a lot of money building and taking apart these largely ephemeral constructions.
The Opel “patents” issue is a pure and simple tax avoidance scheme. Germany is a high tax country, so you want to have your profits in a lower tax country.Lowest tax in the US is Delaware, so there those patents end up. Now suddenly, Opel has to pay high fees and royalties to use the patents. Lowers profits in Germany, raises profits in the U.S. Trouble is, the bill hasn’t been paid, and the German government is apparently taking a dim view.
I wonder if there is legs in the possibility of GM being split to “inside” and “outside” the US. Daewoo make European Chevrolets which share a lot of stuff with some Opel/Vauxhall models. The old Pontiac LeMans hatch of the 80s was a Daewoo made Opel Astra. So maybe a link up would make more sense.
Rover and Chrysler demonstrate that neither Daimler nor BMW are particularly good at playing in mainstream spaces. They don’t understand the lower- to middle-end of the market or how to do well in it.
Don’t know. BMW shift more 3-series than Ford sell Mondeos, and the predecessors to the Mondeos used to be the best selling cars in Europe. Mercedes sell the A and B class, BMW the 1-series and so on. True they sell at a premium price but they do sell.
I think the problems where more Chrysler’s and Rover’s. In Chrysler’s case the argument for sharing things with MB was overblown and not achieved. For Rover most of their range was based on Honda’s, and Honda angrily pulled out partnership when uk.gov flogged it to BMW instead of giving them first refusal.
@TaxedAndConfused :
I wonder if there is legs in the possibility of GM being split to “inside” and “outside” the US. Daewoo make European Chevrolets which share a lot of stuff with some Opel/Vauxhall models.
The only current Opel model that shares a lot with Daewoo is the Antara SUV, and every review seems to agree it’s utter crap: Bad interior (Opel-ish design executed with Daewoo materials, smelly), much too heavy, crappy Korean diesel engines and weak gassers. If Opel gets more stuff like that, they are doomed.
Don’t know. BMW shift more 3-series than Ford sell Mondeos, and the predecessors to the Mondeos used to be the best selling cars in Europe. Mercedes sell the A and B class, BMW the 1-series and so on. True they sell at a premium price but they do sell.
Agreed. At least in Germany, 1ers and A/B-classes normally sell better than the Opel Astra. In March, the Astra outsold the 1er (8432 Astras, 7021 1ers), but that’s because of the insane deals Opel dealers do these days – and the recent price increases on the 1er. The A/B sold 10,640 times in March.
I’d like to find out where to get such data for other markets.
Why not sell Opel’s “U.S. operations”, AKA Saturn, along with Opel? That way the new owner would have a dealer network and factory (if they threw Spring Hill into the mix) to have (keep) a presence here. Just a thought.
@superbadd75 :
Why not sell Opel’s “U.S. operations”, AKA Saturn, along with Opel?
Because Saturn only has ONE model that overlaps with Opel, the Astra. And that one failed in the American market.
The Astra disaster helped tank Saturn. In fact Opels in general all are responsible for Saturn’s eminent extinction.
Weren’t plans in place to bring the Insignia over as the next Aura? And as for the Astra’s failure, I think a lot of that had to do with GM’s failing to market the car for what it is (a true Euro compact with European driving characteristics, high grade interior, etc.), and not bringing over more powertrain choices. I don’t think the Astra is a car damned to failure, I think it suffers from the same thing most of GM’s great cars suffer from, basically total ineptitude to do anything completely right.
Why not sell Opel’s “U.S. operations”, AKA Saturn, along with Opel?
Because the new company would be in direct competition with the New GM.
Opel, SAAB, Holden merge to become the “World Motors”
Becomes a full importer to North America with American design studios to fiddle with the suspension etc..
Opel/Daewoo gives you small cars, Holden gives you performance sedans/wagons and SAAB returns to it’s niche as luxury car supplier. No sign of GM anywhere in the badge or name. This kills Saturn/Pontiac, removes the stigma of GM badge engineering etc..
Why not sell Opel’s “U.S. operations”, AKA Saturn, along with Opel?
Because Saturn only has ONE model that overlaps with Opel, the Astra. And that one failed in the American market.
I take mad umbarage with this statement. The Astra never killed Saturn. GM did. GM never really wanted Saturn to succeed and the evidence is true in the difference of the Cobalt vs. Astra. The Cobalt has the sedan look, no hatch. It also comes with the 2.0L Turbo for the “SS” version which is directly attributed to the Opel/Vauxhall Astra. GM deliberated sacked the American Astra with the paltry 1.8L and NO ADVERTISING. I have yet to see one commericial for the Astra having seen several for the POS Cobalt.
Don’t blame Opel’s quality for GM’s stupid.