Opel Update
Many of you have been interested in what’s happening in Europe with the sale of Opel to Magna/Skerbank. Here’s today’s post from the Driving Conversations blog, in which GM Vice President John Smith, GM’s chief negotiator for the sale of a stake in Opel/Vauxhall, provides an update on the transaction.
By John Smith
GM Group Vice President, Corporate Planning and Alliances
It has been a while since I last provided you all an update on the status of Opel, but assume you’ve kept up with the selection of the Magna/Sberbank proposal in early September, the subsequent approval of that recommendation by the Opel Trust Board, and the occasional reporting ever since — which has been mostly around the work being done on preparing the binding agreements for signing, negotiations with various labor unions, etc. A lot of progress has been made to be sure.
Since the Trust Board approval was given, the European Union has been reviewing the Opel investor process and the circumstances surrounding the selection of Magna/Sberbank. Such a review is usual and customary when extensive government financial support is involved. Last week, the Directorate-General for Competition expressed concerns about possible limitations on the availability of government financing for all Opel bidders, and how that may have influenced the selection process. The German Government was asked by DG Competition to communicate its position on financing availability to GM and the Opel Trust Board who, in turn, were requested to consider the recommended bidder for Opel accordingly.
Given the significance of the Opel transaction, GM’s Board will soon meet in its regularly scheduled monthly meeting (November 3) to consider Minister zu Guttenberg’s letter and changes to the Magna/Sberbank proposal that have occurred since its last review on September 9. In the meantime, work will continue to resolve remaining open points with the Magna/Sberbank proposal—for example, related to labor cost reductions and the government-backed financing package — to document the related understandings, and complete all preparations for the signing of binding agreements should that be authorized by GM’s Board at the November 3 meeting.
More to come!
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With new Insignia and Astra models coming out, why not do the same thing GM did in NA and keep Opel?
Albeit the new Opels being very nice cars, they are actuallly not profitable as a company. There are no assets you could get a loan on, because it all belongs to GM (and was held from GM bancruptcy by pushing it into a German state trust, don’t fix me on that legally because it’s hard for me to explain in English). Long story short: Opel needs to be restructured, lower plant capacities and STILL needs to innovate in areas like engines and transmissions. And has to overcome a bad quality image obtained in the 90s. About 4-6 billion Euros are estimated for that, plus 1.5 billion loan running out Nov. 30th!! Can GM stem this amount of money?
(BTW: The deal is not to sell ALL of Opel, but to keep 35% of it. Opel knows that it is to small alone to stay alive and vice versa, GM needs the engineering capabilities in Germany).
I now drive a Opel Astra Station and it’s really a good car! I really hope it is not my last car from them!
Cheers,
SuAlfons
Rick, unfortunately as it appears wit hthe demise of Pontiac, once the decisions were made in DC they were cast in stone.
I do find it hard to figure Magna’s game plan to be profitable with Opel without cracking the North American market. It’s simply time overdue. GM didn’t bring us the advanced products from Opel and they’ve gone out of their way in the sale to ensure we don’t see them any time soon. If GM had simply been importing a majority of teh Opel/Vauxhall lineup over the last decade they, for one thing, would not have been so eager to divest, and another, may have been in a different financial can of worms and might not have had to go through bankruptcy.
BTW, after reading some snippets of Rattner’s description of upper GM management being clueless I would challenge Fritz to throw wide open those glass doors and to ride the regular employee elevator at least once a week. If you are already “in touch” then keep up the good work.
I just submitted an idea to keep those great Holden sedans as Chevy’s as a very cost effective replacement for the Impala. I was actually elated that at your responce to the fate of Oel was actually answered.
With the disparity of the dollar to the Euro it would be insane to import, just build those Astras here.
One of the most influential company presidents that I ever worked for got rid of special perks for all the executives including company cars, special parking privileges and executive dining areas. He forced the upper management to mingle with the employees, and morale, productivity, creativity and a sense of ‘we’re all in this together’ came as a result. The “we are better than you” mentality went out the door, because like everyone else, you put your pants on one leg at a time. The company was turned around by one man.
I doubt GM would ever take such bold steps, but then again why not? It could start with you John.
GM actually is one of the most friendly and accessable companies in the world. It has a history of being a great company. GM does great things for many people.
On the contrary chiefpontiac, the new Opel will be precluded from selling in the US market because you will soon see some Opel products in the US under the Buick brand, starting with the new Regal.
But no TwinTop, no Speedster. No AWD Turbo-Diesel with 6-speed manual in that Regal either to compete with the 335d. Bummer! Meanwhile, if it EVER gets here, the Alfa 159 looks better and better.
The sale of controlling interest in Opel is the right move. GM has been over extended abroad and undercapitalized at home. Opel has not been profitable. Opel is just another drain on GM resources. GM’s alternative plan may be to file for the insolvency of Opel:
http://online.wsj.com/article/SB10001424052748703816204574481272272971490.html
Is Opel part of NATO? So, let’s sell controlling interest in Opel, and move ahead. Whats the reason to pay too much for everything and make no money doing it like they do in Europe? Many in the UKn want to emmigrate to Amerca so they get buy a Ford Focus for half of the price they pay in the UK and not have to pay $8/gal for gas.
For the American economy to succeed, the war should come to speedy conclusion.
DISSAPPOINTING THE GENERALS
Lou Dobbs recently interviewed a couple expert military analysts that suggested a complete pull-out of U.S. troops may be the best plan.
Lou Dobbs also has a petition out to bring the troops home.
http://www.loudobbs.com/petitions/viewpetition?petitionID=-707412079780467944
Even Glenn Beck is saying, “Fight to win or bring our troops home.”
Ronald Reagan suggested a similar thing during President Johnson’s efforts in Vietnam, win quickly or leave.
No such luck with White House and Miilary planners who seem bent on keeping the American economy a hostage to continuing wars without end in the Middle East.
Luxury cars and affordable luxury will continue to sell while the American middle class is squeezed?
A quick end to the war would keep gas prices low and car sales high, maybe even revive the economy.
It appears that GM has made the right decision to retain Opel which apparently can support Chevrolet’s advantage over Hyundai in Russia, which makes it more likely Opel can be restructured to become profitable. A profitable Opel is an advantage for GM.
Apparently, GM believes it can restructure Opel successfully which is very good news.
It appears that a partial sale to Russian interests would be too risky.
I say build them here. Why import? Enough of the American dollar is going abroad. GM is an AMERICAN automaker, let them keep building American car plants to help the US economy.