Germany’s Chancellor Angela Merkel herself has confirmed that GM is ready to sell Opel to Magna. The offer comes with yet to be disclosed conditions. However, according to news-adhoc, Frau Merkel “doesn’t have the impression that behind the announcement of Opel is a hidden agenda that sets the threshold so high that in the end there won’t be a sale.” This is politico-speak for: “Do we smell a rat here?” Das Handelsblatt has more details.
Magna/Sberbank will take over 55 percent of Opel, GM will retain 35 percent and the workers will hold a 10 percent share. Opel will “remain integrated in the worldwide development network of GM.” On the list of open issues: A written confirmation of the workers that they “will support the necessary cost adjustments” (i.e., take expensive haircuts) and a definitive financing package by the German government.
The Opel Trust also approved the deal, says Finanznachrichten.de. Interesting: The Opel Trust holds Opel as security for the €1.5 billion bridge loan. The board of the trust had to vote. Manager Magazin writes that there was one vote against: By the representative of the German government, Manfred Wennemer. He thinks Opel’s costs are too high, their Russian goals unreachable. Thumbs down. Also interesting: The representatives of the states, where Opel has factories, abstained. The deal was approved with the votes of the GM representatives on the board. As for factories, all German factories will be kept open.The factory in Antwerp will be shuttered. In the UK, “Magna said it was committed to keeping Vauxhall’s Ellesmere Port plant open,” says the BBC. “Doubts remain about the firm’s Luton plant.”
According to Das Handelsblatt, GM “played poker until the end.” In the end, GM realized that they don’t have the money to hold on to Opel. Yet, the deal is still far from closed. Das Handelsblatt heard from governmental sources: “Whether Magna can live with GM’s conditions won’t be decided before the election date. After that, we will see.”
BBC reports that Opel and Vauxhall have been sold to Magna
“In the end, GM realized that they don’t have the money to hold on to Opel.”
They sure took their time realizing…
Condition #1: No Magna-Opels sold as Penske-Saturn in NA!
The fallout will be interesting to say the least.
Magna can vertically integrate any parts supplied by their competitors, but will likely be on the shit list of many other automakers that they supply today with their new status as a competitor.
Will the Euro shit list extend to North America, and neuter Magna’s strong Tier 1 position?
I can’t imagine the add’l Opel Tier 1 volume and profits they can make from retail auto sales (keeping 70%) could cover the losses from other automakers avoiding them like the plague.
Is this good news for Lear, Johnson Controls, and Faurecia? Or will the cost reduction of vertical integration create a much more profitable Opel, vaulting Magna into a position as a successful OE while retaining most of their current Tier 1 business?
“…GM “played Poker until the end.”
This is politico-speak for: “General Motors displayed their insufferable arrogance, contempt, distain, and total boorishness until the very end, at which point the fog cleared a bit.
GM had to privately eat a boatload of their bravado and admit to themselves what everyone is already keenly well aware of: they are a financially, morally, and ethically bankrupt business.”
Magna can vertically integrate any parts supplied by their competitors, but will likely be on the shit list of many other automakers that they supply today with their new status as a competitor.
Despite VW’s posturing**, this isn’t a big deal. Toyota does the same with Aisin and Denso. GM has (had?) Delco. Ford has (had?) Visteon. I’m sure there are others I’m missing here.
I don’t think Magna’s in any real trouble in this regard. What will be tricky is seeing what GM does to them with DaewooChevrolet Europe.
** And VW really isn’t interested in the conflict of interest, it just wants Opel gone. Magna, unlike RHJ and GM, actually wants to build cars.
@ psarhjinian:
I don’t see the similarities. Aisin and Denso are keirestu and Delco/Visteon are spin offs. The big difference is that none of them ever produced a single competing vehicle.
It is very new territory in the industry to have a supplier turn into a full fledged competitor. Auto OE’s go to great lengths to *try* and keep their competitive information secret when it comes to new vehicle design and features.
It makes sense that giving a competitor such information would be disconcerting.
Moreover, you underestimate the egos of industry executives. I can hear the discussions now about “how Magna dares to cross the line from supplier to full OE” without asking for their customers’ blessings.
There will be blow back. The question is how much and for how long?
Will Magna now have to up the pay of their existing employees to match that of Opels people? If they do they become uncompetitive with Lear etc (look whats happened to Delphi and Visteon). If not, how will the unions react? and I can’t believe that the workers in Opel/Vauxhall will willingly take a cut to supplier pay levels.
Magna have an interesting time ahead of them. rationalise GM-Europe, keep all the unions happy and don’t p&ss off their OEM customers while building competitive vehicles…… I admire their ambition.
I agree with psarhjinian – VW (and Ford, PSA, Fiat etc) want Opel gone
I don’t see the similarities. Aisin and Denso are keirestu and Delco/Visteon are spin offs. The big difference is that none of them ever produced a single competing vehicle.
Toyota effectively controls Aisin. Aisin sells transmissions to everybody. Denso is the same, but they sell to everyone.
Delphi (sorry, not Delco–my bad) was effectively controlled by GM. Delphi sells all sorts of shit to everybody.
Magna has a stake in (not controls, has a stake in) Opel. Magna sells all sorts of shit to everybody.
Functionally, there’s not a lot of difference there. Toyota damn well competes with a lot of the companies who buy Aisin transmissions. Those same companies are bankrolling Toyota by buying Aisin and don’t seem to care. Magna/Opel aren’t really different in that sense.
The only reason there might be blowback is that some people (read: Volkswagen) want Opel dead, dead, dead. VW stands (stood?) to gain from Opel’s collapse. An extant, if not revitalized, Opel doesn’t help a lot of companies, but it’s VW who would likely benefit most from the dead cat bounce. It would give them the breathing room they need to stay abreast of Toyota, Ford and the like in Europe.