In the high states poker for Opel, GM did put the cards on the table, got up and walked.
Automobilwoche [sub] reports that GM handed over “all European plants, patents and access technologies debt free to the Adam Opel GmbH.” It’s official, the supervisory board of Adam Opel GmbH has acknowledged it. What’s more, the supervisory board of the GmbH (in reality, GM) “accepted the trustee model of the German government.” This clears Opel for a new investor, and keeps the company clear of the downdraft caused by the impending bankruptcy of the mother ship.
Tonight, there will be a meeting in Berlin that may decide who will take over Opel—with more than a little help of the German government. It could be a long night.
According to recent reports, the night most likely will be inconclusive.
Government spokesman Thomas Steg told reporters in Berlin that the meeting was unlikely to decide on a single preferred bidder, Reuters says. The focus would be on narrowing the field: “It is much more probable that talks will be continued with at least two investors after today’s meeting.” To buy time, the government may decide on bridge financing instead. With Opel separated from GM, the matter is less urgent and Berlin can negotiate with contenders at leisure.
BAIC, the Chinese contender, couldn’t come in time for the meeting, says Automobilwoche (it’s a long way from Beijing.) However, they are still in the running.
We predicted Opel heim ins Reich last November. It was an easy call.
Funnily enough, I won a poker game the other night and I won by employing the same tactics as Toyota did to GM (and Honda and Hyundai and Nissan, etc).
I caught a lucky hand early in the game and (metaphorically) chopped their legs out,then, I just leaned on the rest of the players until they collapsed, completely broke.
Likewise, GM are walking away from Vauxhall/Opel, giving them all their patents and I.P, simply to make it attractive as possible to raise the value of the company.
GM must be in deep trouble to forfeit their European operations. It was one of their more competent entities (it needed a little attention, but it was do-able) but they’re selling it off to get some money to fund their bankruptcy.
GM should heed a common saying in gambling circles:
“A good gambler knows when to walk away”.
If GM heeded this information, they would have filed for bankruptcy 3 years ago, whilst they had a chance to regroup.
You guys may have called it, but this whole charade has made no sense to me from the start.
With the government subsidising GM to the tune of around $100m a day, I just don’t understand what rationale there is for GM to simply give Opel away for nothing? Opel is by far GM’s most competent and coherent engineering division – A through D segment is pretty new and well-regarded, it seems madness for GM to simply give this away. There is so much inherent value in that operation that GM NA is now going to be without, to me it would’ve made much more sense to just throw a couple of billion more and keep Opel?
Now how’s GM going to build anything worthwhile? Didn’t Epsilon and Delta platforms originate with Opel, and doesn’t Opel engineering play a big part in GM’s better offerings? I don’t understand why they are willing to just walk away from the part of GM that’s still reasonably viable. When shall we expect for them to sell Holden to the Australian government? And please, oh please, will they sell GMDAT too? More misguided moves from a company that has no clue. Fail.
KatiePuckrik :
May 27th, 2009 at 7:24 am
GM should heed a common saying in gambling circles:
“A good gambler knows when to walk away”.
If GM heeded this information, they would have filed for bankruptcy 3 years ago, whilst they had a chance to regroup.
The problem with that is, someone at GM would have had to admit that they screwed up. That would never had happened. Hell, nobody still there is admitting they screwed up. The poor economy and the bad practices of the banking industry are the reasons that GM has to file CH11.
superbadd75 :
May 27th, 2009 at 8:10 am
Now how’s GM going to build anything worthwhile? Didn’t Epsilon and Delta platforms originate with Opel, and doesn’t Opel engineering play a big part in GM’s better offerings? I don’t understand why they are willing to just walk away from the part of GM that’s still reasonably viable.
The D3 have a long history of selling viable businesses so they can support the “core” business. Nobody has been creative enough to think, “maybe we should just change the focus of our business?”.
The reason GM chopped Opel is because noobody would buy them.
So why not hold onto it? As I said, you can’t seriously make a case that Opel represents a black hole when they’ve recently renewed (or are about to) their mainstream players in A, C and D segments, which is mainstream sales city in Europe. I don’t understand the eagerness to get rid? Compared to what GM is burning at home, Opel is a drop in the ocean, and it adds value to the operation – without Opel, GM will have a really tough (OK, even tougher) time post-C11.
Hopel and Change!
With all of GMs divisions, units, spinoffs, subsidizers, and potential buyers, I really wish someone would issue a program like they do at baseball games.
Now how’s GM going to build anything worthwhile? Didn’t Epsilon and Delta platforms originate with Opel, and doesn’t Opel engineering play a big part in GM’s better offerings?
Nissan/Renault
At least there will be no litigation over what the germans do with opel now.
What is Buick going to do now? Weren’t they going to use the new Epsilon (Epsilon II?) as the underpinnings of the new Chinese Buick sedan?
Bertel…any thoughts?
http://www.globalmotors.net/2010-buick-lacrosse-spied-in-germany/
Interesting article in Tuesday’s NY Times which might explain why GM is giving away Opel.
There is overcapacity in car manufacturing in Europe and the US. The US is dealing with the overcapacity by shutting plants and laying off workers. But the German government has not allowed this to happen in Germany.
While we prop up what remains of GM and Chrysler the Germans are using their tax money to keep ALL car workers employed even while fewer cars are being produced.
The NY Times article quotes analysts saying that Germany will be facing a great problem some time in the future with what to do with all those excess workers.
Anyone who takes on Opel will have to put up with their debt and their government protected (so far) excess work force.
In the US the dealers have wrapped themselves in nasty state franchise laws while in Europe the workers have wrapped themselves in protective laws.
Re. the “excess” workers- can’t Germany implement the “final solution”?? Or is that nowadays the sole domain of the Chinese?
What does this mean for Vauxhall? Is it part of Opel or a separate entity?
What does this mean for Vauxhall? Is it part of Opel or a separate entity?
The article says that all of GM Europe has been handed to Opel today, which includes Vauxhall.
When, in the history of business, did anything similar ever happen?
The wealth destruction happening here is without precedent.
“When, in the history of business, did anything similar ever happen?”
The closest thing I can think of is when passenger rail business collapsed in the US and what was left of it was picked up by the government and turned into Amtrak. Once upon a time, passenger rail was the primary way people moved around the country. Ironically enough, it was the automobile which fatally maimed passenger rail.
“The wealth destruction happening here is without precedent.”
Indeed, which is why so far the massive money creation by the fed hasn’t boosted inflation. The money being created at the fed is still dwarfed by the money destroyed in the markets.
John,
Please see “Editor’s Video Pick” re. inflation.
http://bloomberg.com/
Don’t worry, there’s always a delay. Inflation does not occur instantaneously….but it’s coming.
When, in the history of business, did anything similar ever happen?
The wealth destruction happening here is without precedent.
Bull. It was called the Great Depression. Look it up.
Any news on Saab?
rodster205 :
May 27th, 2009 at 10:49 am
When, in the history of business, did anything similar ever happen?
The wealth destruction happening here is without precedent.
Bull. It was called the Great Depression. Look it up.
That’s a quite misinformed reply, rodster.
The great depression happened as a result of a large number of factors (read The Ascent of Money by Ferguson for a quite good run-through of those factors.) And it involved a large number of nations and actors, down to very small investors.
I could have been clearer, possibly, but it’s fairly self-evident. With GM we’re dealing with a small number of decision makers who have been running their company full steam ahead straight towards a clearly marked cliff, for years, shedding wealth in the process. It’s not a case of the instant panic that caused the Great Depression, but of a long premeditated descent into insignificance, from being the world’s largest and most powerful company.
Simply effing amazing to behold.
So a “new” 2008 Opel, er Saturn, Astra should be a friggin’ steal these days…assuming you can find one for sale that isn’t a metallic grey four-door…
# Ingvar :
May 27th, 2009 at 11:10 am
Any news on Saab?
Fiat is bidding, as I understand it. Did Geely go away?
The German government is protecting jobs in Germany – Opel. Vauxhall are being ignored because the UK govt hasn’t come up with the Euros or £s.
We had Lord Mandelson (mandy), the UK Business Secretary on TV tonight saying that Vauxhall aren’t in as bad a shape as Opel and that’s why there’s no UK taxpayer money on the table yet. Right. Just shows how much he understands multinational business. I very much doubt that Vauxhall is self funding – it shares product with Opel Europe, and also cash. The GM Europe treasury control the cash on a continent wide basis and leave enough in the national company’s bank to meet the local liquidity rules. And why would they leave any more than the minimum in UK currency when it’s weakening vs the Euro? So, if Opel Germany need money, do you really think the German govt will allow them to send Euros to fund Vauxhall? I think Luton and Ellesmere Port are toast, just a matter of when.
Don’t worry, there’s always a delay. Inflation does not occur instantaneously….but it’s coming.
We only wish our problem now is with inflation, in fact that’s exactly the plan since overshoot is inevitable.
So no points for original thinking.
“Don’t worry, there’s always a delay. Inflation does not occur instantaneously….but it’s coming.”
Inflation requires too much money chasing too few good and services. Just where is the requisite scarcity of goods and services to come from? Nearly every industry around the globe has massive excess capacity lying fallow.
I remember in Econ 101 learning that increased government borrowing necessarily caused higher interest rates as government bonds push private lending to the side. Then Regan went on a massive borrowing binge … and interest rates plummeted. Economics is called the dismal science for good reason. The dismal is clear, the science is questionable. Good science allows highly accurate predictions to be made based on starting values and equations. However, Economics has yet to demonstrate the quality of actual result prediction in the same ball park as chemistry or physics.
Anyone who is dead certain what is going to happen in the future is more than 90% likely to be wrong.
“Final solution” Rastus? That’s pretty bad taste (putting it mildly).
Because of the pressure of September elections, the German govt have allowed the future of Opel to become a single issue idea – protecting German jobs. This will come at the expense of jobs in the UK and Belgium (where excess Astra capacity can be culled and moved to Bochum and Gliwice (GER and POL).
It makes me wonder at what point Marchionne will wash his hands of it and say that all the industrial logic of rationalisation is destroyed? I am sure the German gov’t will force Fiat or Magna (aka Russia by proxy) to make long term commitments to those German plants too. No hanging around for a year or two before you swing the axe. Multi-billion guarantees require multi-year contracts.
Does the Poker analogy even work here anyway? German govt can see both sides of the cards and they are the only ones with money enough to be at the table.