Print 23 comment(s) - last by KamiXkaze.. on May 29 at 10:09 PM

  (Source: Opel Insignia OPC Sports Tourer )

Opel Ampera (Chevrolet Volt twin)
Germany and the U.S. government's failure to reach a deal could devastate GM spin-off Opel

With General Motors hanging on the verge of bankruptcy, one nation which may be critically affected is Germany.  Home to Opel Motors, a huge GM European subsidiary, the nation has much to lose if a deal to spin off Opel and separate it from the troubled GM fails.  However, despite strong interest between top potential bidders -- Canadian parts supplier Magna and Italian automaker (and partial owner of Chrysler) Fiat -- the window to cut a deal is fast closing.

German Foreign Minister Frank-Walter Steinmeier is meeting with Secretary of State Hillary Clinton in an emergency session after 12 hour talks between Germany and the U.S. concluded with no deal.  Germany blames GM and the U.S. Treasury for souring talks.  The talks saw Germany seeking to shield Opel from a GM bankruptcy, making it a more viable takeover target, but it found that GM and the U.S. aren't very willing to do that.  Mr. Steinmeier still has hope for a deal, stating, "[I will] urgently ask that attention is directed at Opel in the coming hours."

Meanwhile GM heads towards a likely bankruptcy on June 1, despite an eleventh hour deal with bondholders.  The success came after last minute moves by the U.S. Treasury to sweeten the deal for bondholders.  In addition to allowing them to both trade their $27B USD in bonds for a 10 percent stake in the company, it allowed them the chance to buy 15 percent of GM's stock at a greatly discounted price -- the extra incentive is what won them over. 

However, the Treasury Department believes GM's problems are too hard to solve outside bankruptcy.  The Treasury Department also believes that it must take ownership of the company to solve its problems -- it will have a 72 majority percent stake in the company, post-bankruptcy, in exchange for the bailout loans and the money it will spend on the bankruptcy. 

The bankruptcy will be the largest industrial bankruptcy in the nation's history.

Unlike GM in the U.S., its European holdings -- Opel and Vauxhall -- are slight more solvent, with enough liquidity to continue operations through the fall.  Germany hopes that a deal will remove Opel from GM during bankruptcy.  If it succeeds Opel may fetch a handsome price. 

Magna Chairman Frank Stronach poured fuel on a potential bidding war fire, saying his company had significantly boosted the amount of capital it was able to offer for an acquisition.  A 300M € ($418.3M USD) offer by Magna was already rejected.  Still, Magna is considered the leading candidate, though Fiat remains in serious contention.  A dark horse is China's Beijing Automotive Industry Corp, which made an offer, which was rejected as too vague.  It could return at any time with a more concrete offer if it desires.

Opel employs 25,000 Germans.  GM (U.S.) employs about 90,000 and recently gave its U.S. employees an early paycheck in preparation for the uncertainty of bankruptcy.

Comments     Threshold

This article is over a month old, voting and posting comments is disabled

RE: That's what you get...
By Samus on 5/29/2009 4:47:13 PM , Rating: 1
And even more so when you decide for the car to fail at 100-150 thousand miles so that we have to buy a new car within 5-10 years.

All cars, even Daewoo's and Yugo's can last for hundreds of thousands of miles. This isn't a design, engineering or manufacturing question. It's a maintenance question. Eventually you reach a point where the vehicle is no longer cost-effective to maintain.

Practically everybody has figured out how to make a reliable internal combustion engine by now, with Hyundai a little late to the game for inline-4's in the 90's, eventually solving their crank walk problems...but vehicle maintenance depends a lot on where you drive and how you drive.

In California, where weather is ideal and roads are in great shape, just about any car can last quite awhile with minimal front-end maintenance, low chance of rust, etc. But you can get sun damage and transmission failures because of the uphill battles you might have in hot, rush hour traffic over the years.

In Chicago, where weather is shit (either too hot or too cold) and roads are third-world quality, you will constantly have to maintain brakes, wheels/tires, front end components such as tie-rods, ball joints, suspension...and rust is a major concern because of salt. Additionally, you wont put on that many miles because the average commuter drives just 5000 miles a year.

The reason I find all this interesting is the midwestern states, domestic auto sales are significantly higher than the coastal states. I don't think that has to do with people being 'open-minded' or this and that like the media sometimes says, but I think it has to do with Detroit building cars for Detroit, that is, a place with potholes, snow, salt, heat, humidity, etc.

Every foreign car I've ever owned I spent significantly more maintaining than my domestic counter part (I drive small cars, usually owning more than one at a time) and I believe its because, even today, foreign cars aren't correctly engineered and designed for all of America.

"It looks like the iPhone 4 might be their Vista, and I'm okay with that." -- Microsoft COO Kevin Turner

Most Popular ArticlesAre you ready for this ? HyperDrive Aircraft
September 24, 2016, 9:29 AM
Leaked – Samsung S8 is a Dream and a Dream 2
September 25, 2016, 8:00 AM
Yahoo Hacked - Change Your Passwords and Security Info ASAP!
September 23, 2016, 5:45 AM
A is for Apples
September 23, 2016, 5:32 AM
Walmart may get "Robot Shopping Carts?"
September 17, 2016, 6:01 AM

Copyright 2016 DailyTech LLC. - RSS Feed | Advertise | About Us | Ethics | FAQ | Terms, Conditions & Privacy Information | Kristopher Kubicki