“Shanghai car-maker SAIC makes approach for Vauxhall,” headlined London’s Telegraph over the weekend. Of course SAIC doesn’t want just the Vauxhall badge, they are interested in the whole Opel/Vauxhall enterprise. What looks like “Opel” through German eyes looks like “Vauxhall” to the British. It’s one and the same.
According to the Telegraph, “Shanghai-based SAIC has requested a sale document from General Motors (GM), the stricken US car-maker, which has warned that it may file for bankruptcy in an effort to ensure its survival. Commerzbank, the German banking group, is orchestrating the sale process on behalf of GM, which is to establish a new subsidiary comprising Vauxhall and Opel, the German car manufacturer. A new investor would be invited to acquire a controlling stake in the company, with GM potentially retaining a minority interest.” Saab and Chevrolet Europe would not be part of the deal. More Chinese interests are lining up:
Not to be outdone, Geely Automotive, the Chinese company which owns stake in Manganese Bronze, the maker of London’s black cabs, has also requested the information from Commerzbank. Probably just to get a peek at the competition.
It’s a long way from requesting a prospectus to the Tipperary of closing the deal on Opel et al. The road is littered with landmines. Various governments need to pony up state guarantees, and there are the nasty details of every light bulb at Opel (ah, and Vauxhall) being mortgaged and the patents held as security by the US government. It remains to be seen whether an engagement of Chinese SAIC would be a hindrance or a benefit.
In the meantime, the Berlin government maintains its ve do nozzhink posture in regards to help for Opel. A lot of talk, no action. The upcoming and decisive September elections turn Opel into a side show, and its workers into pawns for votes. Over the weekend, Franz Müntefering, head of coalition partner and fierce campaign rival SPD, said: “Frau Merkel won’t be able to refuse a government engagement in Opel, if this is the only way to save the company. Too many jobs are at stake.”
According to Automobilwoche [sub], Müntefering made the veiled threat that “Frau Merkel has to consider the fate of the prime ministers of the states where Opel has factories.” They are all members of Frau Merkel’s CDU party.
From Shanghai, the usual ambiguous tones. SAIC is focused on expanding its market share domestically and has no plans for foreign mergers and acquisitions, the China Securities Journal said via Gasgoo. “SAIC, however, will continue to monitor the global auto market and will seek suitable development opportunities,” Chen Hong, president of SAIC said. That’s a definite maybe.
For SAIC, the acquisition makes sense. They might evene be forced to do it. Most of Chinese Buick’s new technology is based on Opel-made platforms, or on Opel/Daewoo developments. If Opel would go down the drain, SAIC would be up the creek.
If SAIC get control of Vauxhall (and its “smaller” partner “Opel” ;O)) then I reckon there will still be job losses in the UK.
Because SAIC own the plant in Longbridge which makes MG’s, they might rationalise it and transfer production to the Vauxhall plant in Ellesmere Port.
The Chinese will need to implement a cost cutting plan if it gains control of GM’s Euro division. This market has too much capacity and needs to lose a few factories. Currently, GM have plants in the UK (two of them), Spain, Belgium (which was supposed to close but unions forced GM to keep it open), Sweden, Poland and about 3 or 4 (I can’t remember which figure) in Germany. This is far too many and a good reason as to why GM Europe got into trouble.
P.S. I could be wrong, but are you sure, Herr Schmitt, that Geely own a stake in Manganese Bronze? I know they share a joint venture in China, but I can’t find any reference to Geely directly buying a stake in Manganese Bronze.
P.S. I could be wrong, but are you sure, Herr Schmitt that Geely own a stake in Manganese Bronze? I know they share a joint venture in China, but I can’t find any reference to Geely directly buying a stake in Manganese Bronze.
I’m not, Frau Puckrik, but the Telegraph thinks so. To wit in pertinent part: “Geely Automotive, the Chinese company which owns a stake in Manganese Bronze, the maker of London’s black cabs, has also requested the information from Commerzbank.”
Herr Schmitt,
Ahhh. It’s the The Daily Telegraph, they’re a pretty poor newspaper. The Independent or the Financial Times are the best, they’re the ones I read.
I can’t understand why GM would want to give up Opel/Vauxhall. Aren’t they doing fairly well as a unit? The story mentions Saab/Euro Chevy, why not just dump those two? With no Opel or Vauxhall, GM would have a hard time getting any sales in Europe. I can’t imagine GM trying to attack the Euro market with Cadillac and Chevrolet.
In January 2008, Geely was at the Detroit auto show and showed the London taxi as one of “their” products. I have photographs.
So yes, I’d say Geely does probably own the ex-Austin taxicab business making London cabs.
Morning, guys.
I can see why SAIC wants to buy Opel/Vauxhall, but since Saturn has a lot of Opel-based product, will they be bought out by SAIC, too?
I hope this will not happen, because all it would do would be to prolong the death of Opel and make it a lot more expensive:
1) SAIC “buys” Opel
2) SAIC gets heaps of government loans on a silver platter
3) SAIC will keep up production of Opels in Europe for as long as their contracts with the different governments demand
4) The next day, Opel will file for insolvency and the taxpayer’s money will be lost in Shanghai together with Opel’s know-how.
At least that seems to be the standard procedure when it comes to Chinese firms buying out struggeling companies.
TTAC should give coverage of these “stories” at least two days; one for the initial “report”, and then one for the official Chinese Government enterprise’s denial…..
No-one has to be bothered about it then.
“I can’t understand why GM would want to give up Opel/Vauxhall. Aren’t they doing fairly well as a unit?”
GM isn’t in a mode of getting to do what it wants to do. Every decision made at GM these days is pretty much in the “we have no choice …” mode.
@tom:
At least that seems to be the standard procedure when it comes to Chinese firms buying out struggeling companies.
Just like they did with MG-Rover, right?
And seeing how GM treated Opel, how Daimler treated Chrysler and so on, “Chinese standard procedure” wouldn’t be far off from “Western standard procedure”.
TTAC should give coverage of these “stories” at least two days; one for the initial “report”, and then one for the official Chinese Government enterprise’s denial…..
The two day period was granted. The Telegraph published it on the 11th. No denial having arrived on Monday, and the story having been picked up in China, we ran with it. In any case, they just asked for the prospectus. I could do that and report “Bertel Schmitt makes approach for Opel.”
@tom
Cerebus already did what you described, step by step (substitute Europe for US). Chinese firms haven’t, even IF they plan on it. So how does that make it that a standard procedure for the Chinese, exactly?
@analyst:
Neither GM nor Daimler did anything like that. While GM turned Opel into a mere nameplate, they did so over the course of 80 years and they have kept it alive as long as they could.
All that Daimler did was to waste giant amounts of cash, but they kept Chrysler intact.
@dilbert:
I agree that Cerberus acts similarly, but I doubt that taxpayer money was what they were aiming at when they entered the deal.
Chinese firms do this all the time. They’ve never done it on such a large scale, but they’ve done it countless times with smaller businesses.
The biggest examples I can think of are MG-Rover (as analyst already mentioned) and the takeover of Siemens Mobile by BenQ – although granted, BenQ is from Taiwan, not from mainland China. But I’ve heard of many similar cases of medium sized businesses being bought out by the Chinese (with taxpayer funding), stripped of everything valuable and then left for dead. In each of those cases, it would have been better (and cheaper) to just let these firms file for insolvency.
Given the current economic climate, even if a Chinese firm did buy a US/Euro car company, do you think the government is so keen on helping a Chinese owned company with their tax payer money? It’s a lot easier politically to let a ferr’in company die, so I doubt it would ever happen.
To give a more concrete example, do you think if Toyota went down the toilet tomorrow, that the US government will bail them out because they have factories in the south? I don’t think so, they would hide behind the capitalist banner in this case.
When it comes to politics, it’s all about psychology.
If Toyota went down the toilet, nobody (apart from local communities) would be eager to hand out money, because it would be easy to blame others: “It’s evil Toyota who’s destroying American jobs.”
On the other hand, Opel is perceived to be German, even though it has been American for 80 years. So there’s a lot more pressure on German politicians, because it’s one of their own companies.
And the German government already said that they’d hand out money should there be an investor. Again, it’s about shifting blame. When it all ends in tears the politicians can say that they did everything they could have done.
With politics, it’s not about what’s good for the company, or even the national economy, but about psychology. That’s why Chinese companies get taxpayers money. Because it feels good in the short term. Jobs are saved and businesses goes on. In the mid term, these jobs will vanish anyway, but once they do, it’s easy to blame the Chinese.
The Germans have a long history of working with the Chinese. A Volkswagen joint venture with SAIC in 1984 started Chinese mass motorization. The VW JV is extremely successful. SAIC is viewed as a solid business partner. China is a huge market for the German tooling industry and for specialized parts the Chinese can’t make (yet.) SAIC / Opel could work and could get government money – from both governments.