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4 Nov, 2009 17:32

Shock GM decision on Opel sale draws ire

The GM decision to back out of the planned sale of a 55% stake in Opel has sparked an angry response in Berlin and concern in Moscow, after months of negotiations went nowhere.

The German government is fuming, the Russian government is concerned but is unwilling to interfere, and the Magna-Sberbank consortium is thinking about legal action. So far it's the Germans shouting loudest and making threats to withdraw financial aid worth $7 billion. After months of pushing for the Magna-Sberbank joint venture and helping the parties seemingly reach agreement on everything from staff redundancies to intellectual property and the financing of the deal, German Economics and Technology Minister, Rainer Bruederle, wanted answers quickly on GM's about face.

“The behaviour of General Motors in regards to the employees at Opel is completely unacceptable; the behaviour of General Motors towards Germany is completely unacceptable. General Motors alone is responsible for this development;  We will not be pressured by Opel and General Motors, and I fully expect them to present their forecasted restructuring plans as soon as possible.”

After months of protracted talks GM finally seemed to approve the sale of a 55% stake in Opel to the Russian-Canadian consortium in September. Magna was going to invest €700 million into the carmaker. While, Russia promised to save jobs and add production at a plant in Central Russia. The acquisition of a dealer network along with engineering facilities was meant to be a giant leap into the future for Russia’s ailing car industry. This may have been a the main reason GM changed its mind according to Igor Morzharetto, auto analyst for Za Rulyom Magazine .

“It was clear from the very beginning that there was too much fuss around this deal. First an agreement should have been made, but there were only letters of intent. Russia scared off both the Germans and Americans by saying that the production will be moved to Russia. By mid summer it was obvious that GM was not eager to move any technology to Russia and that GM would retain a 35% stake and decision-making rights and patent.” 

GM's decision to keep Opel, and restructure the business itself, comes just as American and European car sales are showing signs of improvement.. Opel still owes Germany €900 million in loans, but GM says it will pay it back in November. Half of Opel’s 50 thousand employees are based in Germany. Fearing for their jobs if they remain part of GM, workers are already planning strikes to try to force the American parent company into a rethink.