GM Fights to Keep Opel Division as Politicians Pursue Spinoff

[Oracle of Delphi]

I've been preaching this for months now, as Moses said to Pharaoh, "Let my People go".

Feb. 18 (Bloomberg) -- General Motors Corp. said it’s determined to keep its Opel unit, Europe’s third-biggest carmaker, even as politicians clamor for a spinoff from the U.S. company to safeguard 55,000 jobs in the region.

GM would contemplate selling a stake in the division or allowing it to seek a partner, but still regards it as the company’s “core business in Europe,” regional president Carl-Peter Forster said in a statement today. Detroit-based GM said it aims to cut $1.2 billion from European labor costs and is considering options that include plant closures.

European solvency issues must be resolved by March 31, GM said last night in a report to the U.S. Treasury. While the company resolved to end financial support for Swedish brand Saab by Jan. 1 and warned that the unit may be put into bankruptcy this month, it says Ruesselsheim, Germany-based Opel and U.K. brand Vauxhall are integral to operations.

“Our agenda is to make sure that Opel in Europe is viable for the long term,” said Denis Chick, a spokesman for GM at Vauxhall’s headquarters in Luton, England. “There are no spinoff discussions.”

GM shares in Germany were trading up 5 percent at the equivalent of $2.29 as of 1:28 p.m. local time. They fell 13 percent to $2.18 in the U.S. prior to the company’s filing, which undertakes to eliminate 47,000 jobs worldwide while seeking $16.6 billion in new Treasury loans.

Talks are under way with governments in Germany, the U.K., Spain and Sweden about aid for European operations, according to GM, which said last night it’s seeking $6 billion in grants from overseas governments by 2010. Opel plants in Antwerp, Belgium, and Bochum, Germany, have been earmarked for closure and another in Eisenach, Germany, may be sold, a person familiar with the company’s plans said yesterday.

Spinoff Push

Germany’s federal government and four states are willing to invest as much as 2 billion euros ($2.5 billion) in Opel if GM decides on a spinoff, Christian Weisbrich, deputy chairman of the Christian Democratic Union party in the North Rhine- Westphalia state parliament, said yesterday.

GM’s European Employee Forum had said on Feb. 16 that the envisaged restructuring plan would “finish off” Opel within two years and that a sale was the only feasible option for preserving jobs.

Unions modified their position today, with works council chairman Klaus Franz signing up to a joint statement with Forster that listed partnerships, alliances and equity stakes as options for Opel while stressing its status as integral to GM.

‘Bright Future’

“Employee representatives and GM-Opel management are fully convinced that Opel/Vauxhall has a bright future due to its successful product portfolio, provided that the financial framework can be successfully set up,” the statement said.

Forster said he’s optimistic that Opel will revive once markets recover. Including Vauxhall and ranking Peugeot and Citroen as separate brands, the unit trails only Volkswagen AG and Ford Motor Co. in Europe. Car sales in the region fell 27 percent in January to the lowest in two decades after the economy contracted the most in 13 years in the fourth quarter.

“GM Europe has one of the strongest product lineups it’s ever had,” Forster said, with Opel and Vauxhall recently introducing the Insignia mid-sized sedan and the U.S.-based Chevrolet unit due to role out the Cruze compact and Spark minicar there over the next 18 months.

‘Same Boat’

“It’s very difficult to separate Opel and GM,” said Ferdinand Dudenhoeffer, director of the Center for Automotive Research at the University of Duisburg-Essen. “They’re in the same boat.”

Labeling the restructuring plan “very disappointing,” Dudenhoeffer said there is “no evidence in GM’s concept that they’re serious about breaking with their sins of the past.”

Kris Peeters, leader of Belgium’s Flemish region, where the Antwerp plant is located, said he can envisage contributing capital to a purely European Opel, news agency Belga quoted him as saying today. He indicated that there had been contacts with German leaders regarding a possible Opel project, Belga said.

The German government is waiting for GM to provide details of its plans for Europe before commenting on what public funds may be made available for a rescue, Finance Minister Peer Steinbrueck told journalists in Berlin today. He said he’d be skeptical about buying a stake.

Germany needs to see a “business concept for the future” before making any commitments, Thomas Steg, a spokesman for Chancellor Angela Merkel, said today in a Berlin news conference. Talks are under way and the government expects to receive more detailed plans in the next couple of weeks, he said, reiterating that loan guarantees remain state’s preferred instrument for giving assistance.

Link: http://www.bloomberg.com/apps/news?pid=206...p;refer=germany

[SAmadei]

I've been preaching this for months now, as Moses said to Pharaoh, "Let my People go".

The Hooters (the band, not the restaurant) said that, too.

Edited February 19, 2009 by SAmadei

[FUTURE_OF_GM]

If I were GM, I'd tell the Germans to fork over the money or I'd run the damn company into the ground.

If It wanted to, GM could eat Opels lower market with Chevrolet (via GMDAT) and re-badge all of the current high end Opel designs as Buicks.

Will sales tank? Probably... But Germany sure as hell wouldn't get it's "beloved" little Opel back.

No way in hell I would give up Opel, if I were GM.

GM’s European Employee Forum had said on Feb. 16 that the envisaged restructuring plan would “finish off” Opel within two years and that a sale was the only feasible option for preserving jobs.

I have a hard time believing that GM would "finish off" a vital piece of it's operations... Then again, the management is pretty stupid.

Not to mention, Opel won't LAST 2 years without it's export business. It be the same thing as Saturn; a distribution channel.

Edited February 20, 2009 by FUTURE_OF_GM

[evok]

I've been preaching this for months now, as Moses said to Pharaoh, "Let my People go".

Yet I have been saying for a decade - Opel has not made a profit except for the occasional bout of flatulence when it "toots" up a few million dollars in profit only to return to a hundred million dollar loss.

Give me a break!

[Chazman]

I think some nationalists are using this crisis to pitch for a "German owned Opel" again. Whatever. Wasn't Opel on death's door afew years ago, and GMNA funded it's recovery?

I think that present circumstances excluded, Opel NEEDS to be in GM, more than the other way around.

[PurdueGuy]

I suppose if both Opel and Saturn get spun off, they could team up... *scratches chin*

But for the sake of GM, Opel should stay put.

[Drew Dowdell]

I've been preaching this for months now, as Moses said to Pharaoh, "Let my People go".

And then they wander around the desert for 40 years trying to find paradise only to be sniped at and attacked by the locals....... yeah, there's an idea.

[evok]

And then they wander around the desert for 40 years trying to find paradise only to be sniped at and attacked by the locals....... yeah, there's an idea.

LMAO

[Oracle of Delphi]

And then they wander around the desert for 40 years trying to find paradise only to be sniped at and attacked by the locals....... yeah, there's an idea.

The only ones who are wandering around in the desert for 40 years are the boys at the RenCen, and the North Americans haven't liked them in a long, long time ...

[Oracle of Delphi]

Yet I have been saying for a decade - Opel has not made a profit except for the occasional bout of flatulence when it "toots" up a few million dollars in profit only to return to a hundred million dollar loss.

Give me a break!

Ahh as usual for you evok, Nero fiddles as Rome burns ....

Fear not, I have a feeling GMNA is going to implode from within, even CPF supports a spinoff of Opel, and I have to say, I agree with him, the EU unions and the German government ...

The best thing for Saab and Opel is to be free once and for all of GM ...

[evok]

Ahh as usual for you evok, Nero fiddles as Rome burns ....

I do not think I will be going out too far on the limb if I were to characterize a stand alone Opel without GM Europe as Chrysler.

The German equivalent of Fiat!

[deftonesfan867]

This thread is full of lulz.

[FUTURE_OF_GM]

Ahh as usual for you evok, Nero fiddles as Rome burns ....

Fear not, I have a feeling GMNA is going to implode from within, even CPF supports a spinoff of Opel, and I have to say, I agree with him, the EU unions and the German government ...

The best thing for Saab and Opel is to be free once and for all of GM ...

Wow...

There is so much wrong with this post.

It explains why GM is in the situation it's in (infighting, especially when GME, an entity that died 3 years ago only to have GMNA sweep in and save it's ass, has the balls to want to separate from GM) If I were GMNA, and you went on record "for" CPF, (something I'm sure he appreciates and also vehemently denies in the press) I'd send you both pink slips.

Then again, all of this is in naught anyway... Opel will remain a captive unit of GMNA and it'll probably die a slow, painful death along with GMNA.

Even *IF* Opel is somehow seperated, it wont last a year on it's own.

Remember: "Saab is safe... Saab is safe... Saab has friends... Saab will not leave GM or be killed."

Edited February 21, 2009 by FUTURE_OF_GM

[evok]

Even *IF* Opel is somehow seperated, it wont last a year on it's own.

The question that must be answered is, can GM survive if they keep Opel as the European market is looking to be as big a disaster as the US market. Opel sales were down 10% in 2008, but down 24% in the 4th quarter of the year.

Chevrolet Europe was up 10% for the year and only down 4% in the last quarter.

GM has not posted their 2008 CY finanancial yet but I will bet Opel's are ugly.

I would hate to see GM spin off or whatever with Opel, but at the same time it just may not be worth keeping

Over the past 10 years Opel has contracted and since GM established Chevrolet in Europe the brand has made significant traction and is selling 1/2 million vehicles.

If the numbers make sense and I beleive they do, GM does not need another albotrose around its neck and cutting Opel loose may make sense.

Sometimes it makes sense to cut and run like what Daimler did to Chrysler.

The numbers are linked at the bottom of this PR.

http://media.gm.com/servlet/GatewayServlet...amp;docid=51538

Edited February 21, 2009 by evok

[97regalGS]

Opel-SAAB-Saturn. The world's newest automtovie conglomerate.

Maybe Cerberus should pick them up to add to the mess they have with Chrysler.

Opel-SAAB-Saturn-Chrysler-Dodge-Jeep-Fiat

and the new COO could be PCS.

[ZL-1]

Over the past 10 years Opel has contracted and since GM established Chevrolet in Europe the brand has made significant traction and is selling 1/2 million vehicles.

Which is why Opel have been desperately trying to be seen as 'upmarket'.

Sometimes it makes sense to cut and run like what Daimler did to Chrysler.

I agree with you 100% re cut&run sometimes being best, but I don't know to what extent GME's subsidiaries have been burdened with in terms of costs. Saab listed the establishment of arms-length contracts in its bankruptcy documentation, suggesting transfer pricing systems are, perhaps, not that transparent...

BTW and as an example, Chrysler just got hit with a $500 million tax bill in Canada for transfer pricing-related issues.

[evok]

Which is why Opel have been desperately trying to be seen as 'upmarket'.

I agree with you 100% re cut&run sometimes being best, but I don't know to what extent GME's subsidiaries have been burdened with in terms of costs. Saab listed the establishment of arms-length contracts in its bankruptcy documentation, suggesting transfer pricing systems are, perhaps, not that transparent...

BTW and as an example, Chrysler just got hit with a $500 million tax bill in Canada for transfer pricing-related issues.

Do you have a like to the SAAB filing?

The Chrysler issues appears to be an ongoing disput that even predates the Daimler merger.

But in any case, GM I am sure will consider all the cost. It really depends on how much cach Opel is burning. Fiat, Renault and PSA burned through a ton of it in the 4th quarter.

In 3Q 2007, GM wrote off its deferred tax liability in Germany already.

[ZL-1]

Do you have a like to the SAAB filing?

The Chrysler issues appears to be an ongoing disput that even predates the Daimler merger.

But in any case, GM I am sure will consider all the cost. It really depends on how much cach Opel is burning. Fiat, Renault and PSA burned through a ton of it in the 4th quarter.

In 3Q 2007, GM wrote off its deferred tax liability in Germany already.

It's mostly in Swedish, and it's just a justification of the reasons they want to apply for 'reconstrucion' as it is called in Sweden. I'll be busy tomorrow, but I'll try to post the links if I can find them. They were somewhere at a Saab fan website called www.saabsunited.com

They mention the need to have arm's length contrats re the 9-4X, which is a weir need as those contracts would have to exist anyway since it's 2 different legal entities, belonging to the same group and based in different countries, that will be producing and distribuing the vehicle... The least I can think of regarding that sentence is that it is odd...

To me this Saab/Opel/Daewoo thing (Daewoo has asked the Korean Development Bank for money) just raises questions on top of questions: Does GM believe that selling only Chevies and Cadillacs in Europe is the way forward? Are things so bad that it's all boiling down to panic with each local GM unit going its own way to get money? Or is this whole mess just apparent and GM is using a mask of falling into chaos so they are able to maximize government help money on a global basis?

[evok]

It's mostly in Swedish, and it's just a justification of the reasons they want to apply for 'reconstrucion' as it is called in Sweden. I'll be busy tomorrow, but I'll try to post the links if I can find them. They were somewhere at a Saab fan website called www.saabsunited.com

They mention the need to have arm's length contrats re the 9-4X, which is a weir need as those contracts would have to exist anyway since it's 2 different legal entities, belonging to the same group and based in different countries, that will be producing and distribuing the vehicle... The least I can think of regarding that sentence is that it is odd...

I figured it was in Swedish - Thanks for the summary.

To me this Saab/Opel/Daewoo thing (Daewoo has asked the Korean Development Bank for money) just raises questions on top of questions: Does GM believe that selling only Chevies and Cadillacs in Europe is the way forward? Are things so bad that it's all boiling down to panic with each local GM unit going its own way to get money? Or is this whole mess just apparent and GM is using a mask of falling into chaos so they are able to maximize government help money on a global basis?

The market for all OEMs is a disaster and soon enough almost all the companies will need a bailout if conditions continue. It is that bad. With no banks lending to support bridge loans the supply chains is next. Hence they are wanting a bailout.

The whole industry is on the cusp of collapsing if the economics do not improve in the next 8 months without government intervention.

The European manufacturers are going to be in worse shape because of the competition and low cash on hand after the huge cash burn last quarter.

In the case of Opel, they will have to license all of their technology from GM if they are spun off. That is just what Daimler did to Chrysler. Opel will be a short lived enterprise without a new owner with deep pockets and no one has deep pockets besides the government. And what does Germany need with BMW, Daimler, Opel and VW? Germany is screwed right now as their exports dry up. It is possible that all four could be nationalized and merged into one company.

People better pray the Obama stimulus works??

[FUTURE_OF_GM]

The question that must be answered is, can GM survive if they keep Opel as the European market is looking to be as big a disaster as the US market. Opel sales were down 10% in 2008, but down 24% in the 4th quarter of the year.

Chevrolet Europe was up 10% for the year and only down 4% in the last quarter.

GM has not posted their 2008 CY finanancial yet but I will bet Opel's are ugly.

I would hate to see GM spin off or whatever with Opel, but at the same time it just may not be worth keeping

Over the past 10 years Opel has contracted and since GM established Chevrolet in Europe the brand has made significant traction and is selling 1/2 million vehicles.

If the numbers make sense and I beleive they do, GM does not need another albotrose around its neck and cutting Opel loose may make sense.

Sometimes it makes sense to cut and run like what Daimler did to Chrysler.

The numbers are linked at the bottom of this PR.

http://media.gm.com/servlet/GatewayServlet...amp;docid=51538

Wow... I had no idea that Opel was doing that badly and Chevrolet was doing so well over there (You know, we get a MUCH different story here on the board)

So maybe the Opel export business (to Buick or Saturn) is because Opel needs volume instead of "Opel is so great that GMNA wants us to build cars for them"

[ZL-1]

The market for all OEMs is a disaster and soon enough almost all the companies will need a bailout if conditions continue. It is that bad. With no banks lending to support bridge loans the supply chains is next. Hence they are wanting a bailout.

The whole industry is on the cusp of collapsing if the economics do not improve in the next 8 months without government intervention.

The European manufacturers are going to be in worse shape because of the competition and low cash on hand after the huge cash burn last quarter.

In the case of Opel, they will have to license all of their technology from GM if they are spun off. That is just what Daimler did to Chrysler. Opel will be a short lived enterprise without a new owner with deep pockets and no one has deep pockets besides the government. And what does Germany need with BMW, Daimler, Opel and VW? Germany is screwed right now as their exports dry up. It is possible that all four could be nationalized and merged into one company.

People better pray the Obama stimulus works??

Yep, better pray that it works. If it doesn't we're all going down the toilet for a decade or more (think of the Japanese situation).

I'll try to attach the Saab stuff anyway. Let's see if it works.

Saab_Bankruptcy_Feb20th2009___001.pdf

Saab_Bankruptcy_Feb20th2009___002.pdf

[Chazman]

People better pray the Obama stimulus works??

I'm certainly not optimistic about that.......

[evok]

I'm certainly not optimistic about that.......

ZL-1: Thanks

Chazman: The first mistake Obama has made with regard to the auto industry is not appointing a czar. Like you I am not filled with "hope" about the economy's prospects and for that reasons a Auto Czar is needed to restructure the whole industry.

Global coorddination is also going to be needed at the rest of the industry falls apart.

If Chrysler's viability plan is to be believed, JPMorgan and the other banks did not give an inch on Chrysler debt. Considering their bailout they should take a serious haircut. They got stuck with all of that bad debt when they could not sell it to the same suckers that refused to buy anymore mortgage bonds.

According to Chrysler's plan they will have over $20billion in debt including the Treasury loans.

Maybe Chrysler just needs to go away and just maybe so does Fiat and a bunch of European companies. Maybe GM should just consist of Chevy and Cadillac. Something big is needed if the stimuls does not work and I mean globally.

Obama needs to assume the worse and move on the restructuring asap through a point man aka Car Czar.

Edited February 22, 2009 by evok

[Chazman]

Obama needs to assume the worse and move on the restructuring asap through a point man aka Car Czar.

Frankly, I think Obama is simply winging now. After passing 1 trillion in pork barrel spending last week, yesterday he says he wants to balance the budget. We'll see the details of his plan this week (I'm sure the Dow will drop another few hundred points again at that time), but it's been leaked that it consists of cutting military spending and raising income tax and corporate tax.

Lord help us...........

[Drew Dowdell]

Wow... I had no idea that Opel was doing that badly and Chevrolet was doing so well over there (You know, we get a MUCH different story here on the board)

So maybe the Opel export business (to Buick or Saturn) is because Opel needs volume instead of "Opel is so great that GMNA wants us to build cars for them"

While I have to stick up for Opel in that I think the cars they are building now are excellent, I also have to say that the non car enthusiast Germans that I speak to do not think very highly of Opel. They seem to be looked at with about as much respect as Plymouth was here in it's final years.

[ZL-1]

While I have to stick up for Opel in that I think the cars they are building now are excellent, I also have to say that the non car enthusiast Germans that I speak to do not think very highly of Opel. They seem to be looked at with about as much respect as Plymouth was here in it's final years.

Opel = VW = everyman's brands.

When VW wanted to compete with Mercedes (while Audi was supposed to be BMW's competitor) by releasing the Phaeton, massive laughing ensued... Opel build very good cars, but they have absolutely no 'premium' aura.

[Drew Dowdell]

Opel = VW = everyman's brands.

When VW wanted to compete with Mercedes (while Audi was supposed to be BMW's competitor) by releasing the Phaeton, massive laughing ensued... Opel build very good cars, but they have absolutely no 'premium' aura.

Opel definitely seems to be bottom of the pack out of all the major German brands.

While VW doesn't have the cred to go up against Mercedes, They are respected in a way that Oldsmobile (the brand) was respected here. They build good cars, but nothing exciting and certainly not Mercedes level. Where as Opels are the Plymouth of the homeland brands.

I'd go out on a limb and say that Ford of Europe is more respected by the Germans than Opel is.

[evok]

Frankly, I think Obama is simply winging now. After passing 1 trillion in pork barrel spending last week, yesterday he says he wants to balance the budget. We'll see the details of his plan this week (I'm sure the Dow will drop another few hundred points again at that time), but it's been leaked that it consists of cutting military spending and raising income tax and corporate tax.

Lord help us...........

BO is only as good as his advisors and I personally do not think Larry Summers and Tim Geithner are up to the challenge. The amazing thing is they have had months now since the end of the election to figure out a policy with the help of the transition teams.

As far as the banks go, they seem to adopting the Japanese model instead of the Swedish model.

Really it irks me that they did not establish a point contact for the auto industry. Tim Geithner can't figure out the banking system much less tackle automotive also.

[Chazman]

Really it irks me that they did not establish a point contact for the auto industry. Tim Geithner can't figure out the banking system much less tackle automotive also.

I agree. At least a czar would have been a "go to" guy. Now we're just getting a panel where no one makes decisions.