There’s some surprising news in Automotive News [sub] today in GM’s ongoing attempt to save Opel (and, more importantly, its intellectual property). Since the German Government shot down the only proposal that would keep Opel IP with GM, the General is scrambling to prevent its erstwhile German arm from falling to Magna and GAZ/Sberbank. But who on earth would give GM the $4 billion it needs (now) to keep Opel on board the mothership (for the moment)? Surely only the American taxpayers are that gullible! Unfortunately for GM, there’s a catch. Automotive News explains:
Because GM is barred from using funding from the U.S. government from its reorganization in bankruptcy to support its international operations, one of the options could include raising money by selling or mortgaging the automaker’s assets in China, one of the sources said.
Ruh-roh! China is widely acknowledged to be GM’s saving grace. The General enjoys a long-term presence and favorable brand image in the world’s largest and strongest market for cars, and it could be argued that Chinese profits kept GM from gong bankrupt years ago. On the other hand, Opel’s sales fell more than ten percent in 2008, part of a sales erosion that dates back years. The problem? GM’s recent $9 billion investment in Opel (current status unclear), $6.5 billion of which was planned for new product development. Much of that money presumably generated products and platforms that GM is counting on to fill out its global portfolios. If all that IP goes away though (and again, that “if” is based on how much of that investment was made before GM’s bankruptcy), GM could be forced into greater dependence on its less-lauded Daewoo division to develop global products.
What’s a multinational to do? GM could probably find plenty of offers for loans backed by GM China assets, but only because the assets are valuable and the risk of GM eventually defaulting are high. Losing China to save Opel would be GM’s final epic blunder, but losing a major source of future product development and IP won’t be good either. GM is so not out of the woods, it isn’t even funny.
Wow, what a mess!
What is so special about the Opel IP? Don’t tell me they outsourced a critical amount of it to a subsidiary! No great corporation could be that stupid.
/sarcasm off/
Makes you wonder what Opel has exactly.. Must be some pretty suhweet stuff…
Might be cheaper for GM to get a cash advance from Visa than deal with the Chinese. Certainly less risky.
In a sense, GM got screwed by using its global resources. Ford gets complimented for Mullaly doing the obvious thing and federalizing Ford’s competitive European small sedans. GM decided to save money bringing in European product like the Astra and they manage to bungle the IP in their bankruptcy.
“its less-lauded Daewoo division”
Talk about understatement.
Now they are paying the price for not developing more vehicles in North America. If they can’t engineer and design vehicles in the US maybe they should not be in the carmaking business at all.
akear: The US isn’t world’s largest car market. The EU is and the rest of the world is following EU rules with respect to crash test etc. There is also the question that you can export a European car model to any third world counry and sell it. That is simply not true for American cars as they are often simply to big/thirsty.
A good example is VW who sells its models first in Europe and than moves the tools and dies to China/Brazil for its second life. But VW isn’t the only one who does it. Renault/Peugeut/GM(Opel)/Fiat do it to
“ruh-roh!” indeed.
Ford has mortgaged everything up to and including the blue oval what’s the big deal if GM mortgages the Chinese business? It’s not like they are declaring bankruptcy and ending up being owned by Uncle Sam and the UAW.
I think this has been the plan all along, seeing as the US is moving back to a car based market, there is no real way GM could survive without Opel, GM just bought time (Its hard to imagine, but the new board seems to be playing a good game)
“Because GM is barred from using funding from the U.S. government from its reorganization in bankruptcy to support its international operations, one of the options could include raising money by selling or mortgaging the automaker’s assets in China, one of the sources said.”
A call to a corrupt senator or two should fix that problem. Just look up “democrat” and dial randomly.
Time to realign the deck now that the U.S. has given up 50 billion to the so called “Struggling Automaker”. Back to “business as usual”. Maybe there are a few more bonuses to be had with the money!
What really HAS happened other than a bunch of talk and phasing out models that were already 8 years old to begin with?
Stellar job GM. Stellar job.
A call to a corrupt senator or two should fix that problem. Just look up “democrat” and dial randomly.
So much has been added to this discussion, the world is a better place.
After all this talk of GM’s US cars better than ever: worth looking at, volt rolled out every 60 days for a press event, new camaro, we find out the emporer has no clothes. Yes the malibu which was well regarded is opel. But let’s look at the other side of the auto lineup in the US. The DTS caddy (the high end profitable one remember) is ancient wih a four speed auto and aging engine, and a chassis from the nineties. Whether the new buicks appeal to younger buyers has yet to be proven, and there is no large chevrolet car period. Where real money used to be made selling high end full size cars, GM is bankrupt. Further let it be known that if the new stuff like the buick lacrosse gets the same `16 miles per gallon that the old stuff gets, there will be more retribution. Truly new and efficient large cars don’t exist at GM or Ford or chrysler. The Japanese, Germans and now the Koreans own this once American niche. Can opel help GM with this, I don’t know, but they don’t seem to have the ability in house to resurrect the large car business.
A more realistic way for GM, is to find a rich Chinese partner and buy Opel. That way GM still has 50% and the Chinese partner will need GM’s expertise in running the company. Just like GM-SAIC.
FYI jerry weber from GM employee communications sheets:
2010 La Crosse EPA/Powertrain:
3.0 & 3.6 Engine dual overhead cam, direct-inject 6 cylinder engines fuel-conserving six-speed automatic transmission: 27 hwy/18 city MPG
Available Late 2009 – Ecotec 2.4L Four-cylinder engine – 30hwy/20 city MPG