GM does a last-second turnabout and decides to keep Opel

[dorin]

So GM just did a last-second turnaround and decided to keep Opel.  It would be interesting to see how that plays out.  In the end, I think that Magna may have actually dodged a bullet.

http://www.theglobeandmail.com/report-on-business/gm-scuttles-magnas-deal-for-opel/article1350085/

GM scuttles Magna's deal for Opel

Greg Keenan

Globe and Mail Update Published on Tuesday, Nov. 03, 2009 5:09PM EST Last updated on Tuesday, Nov. 03, 2009 5:24PM EST

Frank Stronach's vision of turning his Magna International Inc. (MG.A-T43.00-0.27-0.62%) into a full-fledged auto maker has vanished after General Motors Co. decided to hang on to its battered European subsidiary.

The GM move, made after Magna and its Russian partner Sberbank reached a deal to buy 55 per cent of the company, came as the auto maker's board of directors made a final decision on the Magna-led offer late Teusday.

Mr. Stronach was even-handed about the decision, saying “life goes on.”

GM said in a statement late that its board of directors agreed to retain the European business given the “improving business environment” for GM over the past few months and the importance of Opel, which sparked a massive tussle between buyers and heated talks among European governments.

“GM will soon present its restructuring plan to Germany and other governments and hopes for its favourable consideration,” GM chief executive officer Fritz Henderson said in a statement. “We understand the complexity and length of this issue has been draining for all involved. However, from the outset our goal has been to secure the best long-term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached today.

GM said its plan to restructure Opel would tentatively be in the range of €3-billion, well below all the bids submitted.

“While strained, the business environment in Europe has improved.” Mr. Henderson said. “At the same time, GM's overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured.”

There was no immediate response from Magna, Canada's biggest auto parts supplier.

[tpl]

I agree.  Gm should study what the assorted buyers of Opel would have done in terms of closing factories and moving production and maybe so some of that to end up with a lean mean GERMAN subsidiary for themselves. 

I agree that Magna will be better off without Opel.

[ovr50]

Magna will be better off without Opel - let the waffling GM have it. Sounds like a bunch of problems to me, I suspense the only reason Stronach wanted it was for his ego. But I don't really know.....so take that with a grain of salt. 

[articsteve]

Automotive News
November 3, 2009 - 5:00 pm ET

DETROIT (Reuters) -- Here are some analysts' reactions to General Motor Co.'s decision to keep Opel, undoing months of negotiations to sell the European unit to a Russian-backed group led by Canada's Magna International.

Erich Merkle, Autoconomy.com:

"If they are going to be competitive on a global scale, they really don't have much choice but to keep Opel. They need that volume to leverage their small car architectures on a global basis."

"Europe ... represents some significant volume and you take that out and all of the sudden that becomes a hole and you don't have the ability to leverage the small car platforms and that would put you at a pretty distinct competitive disadvantage to Toyota, Volkswagen, and Ford.

"The international markets have really become the homeroom for their small-car development, and without it they become more North American-centric."

GM board members “are going from short-term survival mode to now thinking about 'What is our long-term strategy? How are we going to be competitive and viable and maintain the global scale that our competitors have or will have very shortly?'"
 
Aaron Bragman, research analyst, IHS Global Insight:
"GM never really wanted to get rid of Opel; they were being forced into it because of their financial situation. A lot of GM cars have come out of Opel's engineering, so Opel provides a very useful service for GM globally. Maintaining that foothold there is something that is beneficial for GM in the long run.

"What it means for Opel on the other hand becomes a bigger question. If Opel goes into bankruptcy, they could get rid of a lot of debt and manufacturing costs and Opel could be very profitable for them outside bankruptcy. Otherwise, Opel could be a big drain for GM."
 

[inco]

Ho- hum - here we go again. More drama. 

[sirAQUAMAN64]

Selling a majority stake in Opel would have been a ginormous mistake for GM. Now, what they do with it is the question... if they actually listen to and invest in Opel it would actually get them into a better position.

[safristi]

..rumours have it that the new OPEL MERKEL MERKUR have been cancelled.....

[articsteve]

if they actually listen to and invest in Opel it would actually get them into a better position

But with what.  Who's payin next. 

[Roddy]

I'm really starting to wonder if senility is starting so claim old Frank at magna. The only thing stupider than trying to buy opel was him trying to buy Chrysler - something he did less than a year ago. He seems intent on playing automaker and nobody but him seems to have any idea why.

Whether keeping Opel is a good or a bad thing for GM is a tougher call. Opel is in many respects in much better shape than most of GM's divisions and selling them to Opel would mean giving the competition much of their technology. On the other hand this about face is going to cause GM more than a few problems going forward. The german government is already planning to pull their billions of dollars in bailout funds and Opel unions are talking strike. There is also a question of whether GM really is in a position to hold on to opel at all.