GM, Germany Edge Toward Magna as Opel Buyer
By Bill Visnic May 29, 2009By Bill Visnic
Various press reports on Friday indicate Canada's Magna International had reached a tentative agreement for ownership of General Motors Corp.'s Adam Opel AG automaking unit and most of GM's European operations, including Britain's Vauxhall.
The move would fulfill a long-held ambition for Magna, known mostly as an auto-industry supplier, to evolve into an automaker, although the company's European unit, Magna Steyr, has a strong background of low-volume and niche-volume vehicle production for a variety of automakers, including Mercedes-Benz, BMW and Chrysler.
Magna's move to the forefront in the bid for Opel also deals a serious blow to the aspirations of Fiat S.p.A. chief executive Sergio Marchionne to acquire Opel and combine it with Fiat's mainline auto division and the assets of currently-in-bankruptcy Chrysler, creating a global automaking conglomerate exceeded in size and scope only by Toyota Motor Corp. and perhaps the Volkswagen Group.
It was reported that although Marchionne said Fiat wished to remain in the bidding for Opel, fresh demands from the German government -- which has been highly involved in the situation, not the least reason being it will be expected to provide billions of euros in transitional funding -- dampened Fiat's enthusiasm.
It appears Fiat was discouraged when it was suggested the winning bidder for Opel might be required to stake some short-term cash as emergency funding while Germany ironed out the details of its own funding.
"The last round of requests which would require Fiat, among other things, to fund Opel on an emergency basis while the German government determines the exact timing and conditions of the interim financing, would expose Fiat to unnecessary and unwarranted risks," Marchionne reportedly said in a statement.
It was widely believed Magna, with its history of European vehicle-making operations and long-standing supplier relationships, had been the German government's preferred bidder in the negotiations, although Fiat recently said its plans would not result in as many job losses in Germany as had been reported.
On Friday, it was reported the various parties were working on a trustee-ownership strategy that would temporarily shield from creditors Opel's operations and assets if GM declares Chapter 11 bankruptcy as expected on June 1.
Late on Friday, Dow Jones reported the United Kingdom's business secretary, Peter Mandelsen, as saying it was "pretty likely" that GM and Magna would reach agreement, and said Magna's willingness to supply the interim financing to keep Opel solvent was a key factor.
The U.K.'s Vauxhall unit has two assembly plants in the country that build various Vauxhall, Opel, Renault and Nissan models.
PHOTOS:
1. Insignia is newest Opel model in Europe (Photo courtesy of General Motors Corp.)
2. Magna Steyr began building the 300C for Chrysler in 2005 at a Magna assembly plant in Austria (Photo courtesy of Chrysler LLC)
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That would've thoroughly blurred the brands, wouldn't it?
Italian Fiat building French, Japanese, German and, of course, British cars in merry auld England.
It's much better to have a Canadian company building French, Japanese, German and, of course, British cars in merry auld England, with Russian money.
After all, they are already building an American car in Austria, which is soon to be owned by the Italian automaker that lost the bid to build French, Japanese, German and, of course, British cars in merry auld England.
Fercrineoutloud.
Very well put fulcrumb! I couldn't have said it better myself, or at least not without giving myself a migraine.
So Fiat is out as a dancing partner. And Magna - with backing by a Russian carmaker - is now in. Okay, my one (sort of dumbed down) question is whether this means Opels are moving east or Russian cars are heading west?
Has anyone actually been in vehicles like current-gen Ladas? The quality is frightening and the designs are incredibly dated. And unlike Chinese and Indian car companies, most of whom are barely 10-15 years old and are steadily improving their quality, the Russian carmakers have had decades of experience building, well, really crummy cars.
I know Fiat didn't want to cough up emergency cash. But this deal is just not making a lot of sense to me.
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