GM-Magna: It’s like football: Germany wins in the end. The board of General Motors has finally agreed to sell a majority stake of its European arm to Magna International. This means that the Opel and Vauxhall car brands will go to a Canadian car-parts maker underwritten by a Russian state-owned bank and subsidized by German taxpayers. US state-owned GM will retain a 35 per cent stake in the company and German employees will own 10 per cent. With so many fairies to watch over the baby, Opel board meetings will no doubt become quite interesting.
The drama ends roughly as it began in May, when Magna was chosen by GM, and co-opted by the German government, as Opel’s preferred buyer. But then GM got cold feet, or at least let it be known that it would keep on considering other bids. In the last few weeks, it was rumoured to be trying to find a way to keep the company.
German unions and politicians, however, stayed in Magna’s camp — and the German government holds the keys to Opel’s future. It extended a E1.5 billion bridge loan to Opel in May with the promise of state guarantees for another E3 billion-plus.
The fear that US taxpayers money could be used, however indirectly, to finance foreign operations may have played a role in the final decision not to keep Opel within GM. The argument that a globally strong GM is more likely to thrive in its home country clearly can’t be heard in the current context of heavy government intervention. On the other side of the Atlantic, the German government’s desire to retain German jobs may also end up crippling Opel by keeping under-performing plants open.
Magna is clearly betting on the big Russian hope for Opel, which can count on the manufacturing facilities of deeply troubled local car maker Gaz. But Opel’s opportunity can only be harvested if minority holder GM hasn’t put too many limits on competition with its former division in this promising market.
Angela Merkel, the German chancellor, has got what she wanted: a deal before national elections on September 27. The best thing she can do beyond that is to leave Opel alone.
