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Was there ever any doubt, really? If there was, it’s gone now, as Bloomberg reports that the German government has decided to put its taxpayers’ money behind a Magna-owned Opel. German Finance Minister Peer Steinbrueck told reporters in Berlin that Germany will provide a $2.1 billion “bridge loan” (direct translation) to keep Opel alive. “A solution has been found to keep Opel in operation,” Steinbrueck said. “You can be sure that we didn’t take the decision lightly. All the federal and state representatives are aware that there are some risks.” And there I was thinking understatement was an English thing.
14 Comments on “Germany Picks Magna to Buy Opel...”
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Ah, the infamous bridge loans. Bridge to where, eh?
The Russians are putting cash into the deal as well.
http://www.nytimes.com/2009/05/30/business/global/30auto.html?_r=1&hp
So this pretty much frees Opel from having to deal with GM’s meddling (forcing them upmarket, cutting their feet out from under them with Chevy/Daewoo). GM, in turn, gets to (try to) sell those Daewoos in Europe.
Or, to put it another way, GM just created a competitor with better market presence and experience in Europe, effectively shutting themselves out of the market outside of Cadillacs that no one wants and Daewoos that can’t make much money.
Questions
* What happens to Epsilon, Theta and Delta? As I understand it, Opel owns a lot of these, and GM is moving what it can to Daewoo, which leads to…
* What does this mean for the Gamma II cars, which Daewoo is developing for Opel.
* Doesn’t this sort of leave GM without any real platform design outside of really cheap little cars that aren’t competitive, trucks, Lambda and the Sigma rear-drivers? There’s not a lot of “meat” for a company of GM’s size.
The way this is going it seems like GM will end up as what Cerberus intended Chrysler to be: an abstracted set of nameplates buying cars from some people and developing only a few platforms (trucks, cheapies) for others.
@psarhjinian
Questions
* What happens to Epsilon, Theta and Delta? As I understand it, Opel owns a lot of these, and GM is moving what it can to Daewoo, which leads to…
* What does this mean for the Gamma II cars, which Daewoo is developing for Opel.
* Doesn’t this sort of leave GM without any real platform design outside of really cheap little cars that aren’t competitive, trucks, Lambda and the Sigma rear-drivers? There’s not a lot of “meat” for a company of GM’s size.
It’s been a long time since GM has been good at strategic product planning. These days it’s all about the jobs and the stakeholders … and of course the bailout money.
It’s no surprise that Sergio Marchionne’s dreams of European dominance have been dashed. Bravado only will only you so far with the serious minded Germans.
A tricky deal with Russian Sberbank getting 35%, GM 35%, Magna 20%, German workers getting 10% and the German taxpayers providing 1.5 billion Euros up front.
Notice that GM is still in the game.
There’s no mention in the German press of how much cash the Russians ponied up, what role GM will play, nor of what cuts will occur. My guess is the Flems at the Antwerp factory may be looking at redundancy slips in the near future. The U.K. will have to subsidize Vauxhall Luton.
The US is becoming a place where there is less innovation and more of building other nations products.
Magna is GM’s biggest supplier now, so they will probably still have access to Opel technology. When GM sold out its engineering to Opel, Holden, and Daewoo they weren’t thinking in the long term.
I believe by 2015 GM’s marketshare will level off at just below 15%. This “new” GM does not have the capacity to get anywhere near a 20% marketshare.
As for Detroit’s diminished ability to engineer cars it started quite sometime ago as illustrated by the article below entitled Bye, Bye, American car by Forbes writer John Turrettini. In fact it has gotten a lot worse since this article was written seven years ago.
Bye-Bye, American Car
John Turrettini, 05.27.02
Detroit is waving the white flag and is handing the engineering of its cars over to its foreign partners.
By the time the Model T celebrates its centenary in 2008, Ford Motor will mostly have given up on the American car. Oh, it will still design their bodies and assemble and sell them. But it will be foreign engineers who design the guts of the machines–the suspension, underbody and mechanical gear that determine how a car handles. For instance, Ford’s new high-end family car, the 500, which will come out in two years, will be in large part a modified Swedish Volvo S80.
Why is Detroit throwing in the towel? Because its engineers have gotten killed in the past two decades by their overseas competitors, and because it’s one more way to cut costs. As a result of the many foreign auto alliances they have made over the past decade, the U.S. companies can now tap the very engineering expertise that laid them low. The idea: Reduce the enormous U.S. development costs and create a generation of American-badged cars that are engineered abroad–and drive like imports. The shells–what you “see, feel and touch,” in the words of Richard Schaum, a vice president of Chrysler–will be American-designed.
For rest of article click below.
http://www.forbes.com/global/2002/0527/019.html
So Canada based Magna will become an automanufacturer giving Canada its first domestic manufacturer since the demise of Malcom Bricklin’s outfit. Except the cars won’t be manufactured here but in Germany. Oh Canada indeed.
Meanwhile back at the ranch some scribes have been tallying the amounts that the Federal and Provincial governments have been pouring into GM in order to prevent their manufacturing (and its jobs) slithering back into the US.
A story published in The Globe and Mail Friday estimated that the Canadian bailout will cost $1.4 million for each autoworker job in the country.
But WAIT THERE’S MORE
In fact, auto analyst Dennis Desrosiers said the bailout for GM could top $2 million per job, considering the automaker will have about 4,500 hourly positions in Canada with a total loan of about $10 billion.
The way politicians are running this country I see Canada moving towards a population consisting of a well heeled Civil Service administering to a service industry of minimum wage employees and a vast army of welfare recipients as the manufacturing base continues to diminish.
So what desirable model from Opel should we wish to see in Canada soon ?
It would make sense for Magna to buy saturn since they are already selling Opels.
I’m surprised at how much GM is getting to keep out of this deal. -I mean, don’t GM businesses have essentially negative net value anyway?
Deutschland should’ve just played more hardball with them.
If the only other major opportunity was with Fiat, they could’ve used that against GM. Cooperate with us for a reasonable price, or piss off, let Opel die and then suffer the Italians.
I don’t understand the extra $300M demands on Thursday night. -It seems like hubristic unemployment-extortion by a company already being wildly spoiled by bailer-outers…
-So who gets Vauxhall?
Opel is kissed by the Russians? That must be the Kiss of Death.
From Russia with love…
By going to Magna rather than Fiat, Opel will remain closely associated with GM. Opel isn’t large enough to be independent, so it has to partner with someone.
So does this mean in NA, that “new GM” picks up a new import competitor? High-fives all round then….
I hope that we carry on seeing opel with GM.
One wonders if Fiat was thinking that the larger Opels would be marketable in the U.S. So much for that.
From what I read, the Russian built cars are only competitive with other Russian built cars. So bringing Opels into Russia, albeit current Opels, could be very profitable.