The marathon meeting at the Adlon may not have been for naught after all. “After hours of talks with Canadian auto parts supplier Magna International, GM has reached an agreement, in principle, ” Reuters reports. Now they have to agree on a memorandum of understanding that will serve as the basis for bridge financing of €1.5 billion ($2.1 billion) and the trustee plan that comes with it. The German government will not give the bridge financing without the trustee scheme. Otherwise, their money and Opel will be drawn into the black hole of the Chapter 11 filing that is expected for Monday.
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Suspense in Berlin runs high. At 2 p.m., a meeting was held, German politicians only, no bidders, no GM, no treasury staffers. Fifteen minutes later, Chancellor Angela Merkel left the building—Opel watchers saw that as a sign of a final breakdown. Then at 3 p.m., GM and Magna show up at the Chancellory. Fifteen minutes later, Angela returns. At least they are still talking. 3:55 p.m.: The summit has been re-scheduled. Will start at 6 p.m.. It will be a long Friday night again in Berlin. If talks break down, it will be lights out in Rüsselsheim . . .
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Today, Berlin will re-attempt to save Opel after the disastrous Wednesday night / Thursday morning confab. From most accounts, that meeting was a remake of The Three Stooges, with the actors sent by central casting in Washington and Detroit. Berlin is still fuming about the “impertinence” (finance Minister Peer Steinbrück) of the junior Treasury staffer who demanded an extra $415 million more in short-term cash, above the bridge financing of $2.1 billion Berlin had been ready to sign that night. They also are still grumpy about being lied to, or handed “information with a short half-life” as the finance minister put it ever so politely.

So it’s the evaporation of easy credit that caused carmageddon? Don’t tell that to the Chinese. China became the world’s largest car market (as of the first quarter of 2009) with the bulk of its people paying cash for their cars. Until 2004, getting a loan for a car was more or less unheard of in the Middle Kingdom. Even after 2004, one could only finance a maximum of 80 percent of the price, and it was a straight loan for a maximum term of 5 years. To this day, “residual value” is not part of the Chinese language. Interest rates were high, twice that of a mortgage on a home. About 16 percent of cars sales were on credit after the rules were relaxed in 2004. Did that number improve while the world went on a credit binge? No way: In 2008, the number of cars financed had dwindled to 8 percent. There have been attempts to increase that number as part of the government stimulus package, but to no avail. Consumer credit “traditionally hasn’t been the Chinese way,” says the Wall Street Journal. Quite the opposite:

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It was a long meeting that lasted into the wee hours of the Thursday morning. It ended with the German government throwing insults at the US government. Everybody went home or to their presidential suites with a headache and no deal. If there is no further movement, Opel will go down the drain with GM by Friday.

Before the meeting, there were rumblings that wrinkles had to be ironed out in a trustee plan that was supposed to be the basis for bridge financing provided by the German government. The money was supposed to keep the lights on in Rüsselsheim, while the proper groom for Opel is being groomed.

Mice and men impacted with US government greed. Or lack of their usual largess.

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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.
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Today is—how do they put it at AA?—the first day of the rest of the life of Opel. Or not, as the saying goes around here. Today, everybody who has anything to say about Opel’s fate will get together in Berlin. The papers that will take away GM’s daughter Opel and make it a child of the state and parties yet undecided are already written up and are waiting for the signatures, says Die Welt. Klaus Franz, head of the Opel workers council has seen the paperwork, “and it looks good, everything is going in the right direction,” Franz said.

Present at the meeting will be Chancellor Angela Merkel, Freiherr von und zu Guttenberg, the premiers of the four states that are home to Opel factories, GM Europe chief Carl-Peter Forster, someone from RenCen, along with an anonymous representative of GM’s owner, the US government. Principals only. They will quiz the managers of the companies interested in Opel: Fiat, Magna, Richwood. The one with the most points wins.

Again, or not . . .

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Whoever has been on the inside of Volkswagen knows that they are devout skeptics when it comes to alternative energies. Sure, they do some token research into hydrogen and hybrids to give the blue VW logo a greener hue, but deep in their hydrocarbon pumping hearts, they are devoted pistonhardheads. The aggressive incremental improvement of internal combustion has been their true strategy. Under the “BlueMotion” moniker, they tweak existing technology to wring every last drop of gas (or diesel) out of it. So far, the conservative (and conserving) strategy has succeeded: The new BlueMotion Golf VI, fitted with a peppy 1.6L TDI oil-burning engine, gets 61.9 mpg, handily beating the 2010 EPA 51/48/50 mpg numbers of Toyota’s third gen Prius (YMMV, as you well know.) Suddenly, Wolfsburgologists are registering a change in VeeDub’s secretive Forschung und Entwicklungs Abteilung (R&D Dept., see picture above.)

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Clunker culling is spreading faster than the swine flu. Throughout the world, governments are putting bounties on aging autos. Of course, all for the noble cause of greening the planet. China has come out with a surprising new twist. On May 19, the Chinese government had announced the mother of all clunker culling initiatives. They would not only give cash to consumers who replace their old cars. No, they also offered money for the replacement of washing machines, TV sets, and additional abominable atmosphere attacking appliances. Today, China’s government issued a new edict: Buyers of small cars may not apply. Cash for clunkers is only handed out if you trade in your ancient ride for a new car with a displacement of 1.6 liters or larger, Gasgoo reports. Anything, as long as it’s bigger than 1.6 liters.

Shen me? (Excuse me?)

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Playing poker for money is illegal in Germany. Which doesn’t keep the German government from conducting a high stakes poker game with a group of high rolling players. Around the table: Fiat, Magna, Ripplewood, Chancellor Merkel, Vice Chancellor Steinmeier, Minister Guttenberg. Kibitzing and making comments: The premiers of the Opel states, the unions, the Opel dealers, and just about everybody else. On the table, barely alive: Opel. The Financial Times calls it—with British understatement—“considerable back-room powerplay by politicians.”
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From 1973 through 2005, my job was to create excitement for Volkswagens in the hope that people would buy them. The job had its ups and downs. We loved facelifts and hated totally new cars. With a facelift, we could travel to attractive and warm places for the photo shoot. “Because of the sun.” Not to mention the beach. And the nice amenities of the Hotel Negresco in Nice. With a facelift, we could tool around in broad daylight, and nobody would bat an eye or even think of snapping a picture. Which magazine would publish the spy shot of a re-designed bumper? Totally new cars were top secret. Not allowed to travel outside the confines of the VW factory. Even there, constantly under tarps. The only places we could photograph them were at the in-house photo studio or at the VW proving grounds in Ehra-Lessien.

Forget Jack Baruth and his girlie Boxster. The whole Porsche company is quickly skidding out of control. Porsche, the company that supposedly has more money than Scrooge McDuck, the company where CEO Wendelin Wiedeking and his CFO Holger Härter supposedly take a daily dive into the money, was—hold on to anything stable—facing insolvency two months ago. This is what readers of the German magazine Der Spiegel will read on Monday. The Süddeutsche Zeitung has an advance copy.

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One amazing aspect about the hunt for the distressed assets of Chrysler and GM is the absence of the Chinese. Weren’t they eager to snap up anything they could get their hands on? And who would have thought that Fiat of all auto makers would walk away with Chrysler—and possibly large parts of GM—if their Opel bid gets approved? The absence of the Chinese was duly noted in Ed Niedermeyer’s piece “Where Is China?” It talked about xenophobia, and the discussion soon turned into a xenophobic slugfest and had to be closed.

Have a polluting vehicle? Then give Beijing a wide berth. You are no longer welcome here. Starting in June, any vehicles driving into China’s capital must carry an “Environmentally Friendly” label issued by their local authorities, Gasgoo reports. Environmental oinkers will be banned from driving inside the 5th Ring Road of the capital. From October 1, vehicles not meeting the standard can’t enter the capital’s areas inside the 6th Ring Road—a monster more than 100 miles long surrounding Beijing well outside the city proper. Part of a far-reaching plan to clear the air in China’s capital.
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Top German government officials, including Chancellor Angela Merkel and Hesse leader Roland Koch, are due to meet later on Friday in Berlin to discuss the bids placed for Opel on Wednesday. A decision is not expected before the end of the month. “Running Mouth” Koch couldn’t wait and is already giving odds.

“There is a ranking in which the offer from Magna is closest to the hopes and wishes of many in the German political arena but also the workers,” Koch told the Deutschlandfunk radio station. And the other bidders?

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