GM Decides to Keep Opel After All

The company decides their new life will include an old flame

By Brendan Moore

11.03.2009

Opel logoGeneral Motors has announced that they will keep Opel after all, after months of contentious negotiations aimed at selling a controlling stake in their German operating unit.

The board of GM made the decision earlier today, dealing a death blow to Magna International’s dreams of acquiring Opel and becoming an automotive manufacturer.

When it came right down to it, GM decided they just couldn’t envision a future without their German subsidiary, which provides most of their presence in Europe and is the main source of their fuel-efficient global vehicle platforms.

GM was able to reverse itself on their decision to sell Opel by virtue of their recently improving fortunes. GM stated that it will perform the necessary financial restructuring at struggling Opel as soon as possible, and move forward towards that goal with the help of various state incentives that were offered to the previous potential buyers of the company.

GM logo smallI think GM has made the absolute correct decision in deciding to keep Opel.

One, they need Opel’s small car expertise.

Two, if GM is going to be a player in a global sense, they need to be, well, global.

Three, there is no way to foretell the future, but the decision to sell Opel may have come back to haunt GM from a competitive perspective as Opel’s intellectual assets may not have been adequately protected under Magna’s stewardship.

I also want to give some serious props to GM’s new board, who obviously is not the same risk-averse group that GM was saddled with previously. The easiest thing to do would have been to keep going down the path that was already set, go along with the complex plans already set up for Magna’s purchase of Opel, but the board did what was right for GM’s future. GM’s board is more or less telling the company that the best defense is a great offense. Which, let’s face it, is true – you generally cannot save your way to first place in business. You have to sell something. Kudos to the board members for pushing GM to realize their goals.

Following GM’s announcement, Magna’s co-chief executive, Siegfried Wolf, said: “We understand that the board concluded that it was in G.M.’s best interests to retain Opel, which plays an important role within G.M.’s global organization.” He pledged to “continue to support Opel and G.M. in the challenges ahead.”

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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10 Comments

  1. Bravo! I’m glad to see it.

    GM needs Opel and they should have them if they’re serious about a global comeback.

    Very good news!

  2. Great News! Opel is too great an asset to put at risk by putting Magna in control.

  3. Was this their plan all along, I wonder?

  4. Germany and Russia are pissed off that GM backed out of the deal. They’re saying it is “unacceptable” and are asking the American government to pressure GM into selling Opel like they said they would. I don’t think that will happen, though. Tough luck, guys!

  5. Absolutely a great move. I hope GM will follow Ford’s lead of bringing over their fuel efficient European models for manufacture in the U.S. Give us more Opel-designed models and fewer Impalas. Looks like this new board is headed in the right direction.

  6. There is no way that the best stuff Opel and GM has wouldn’t soon be in Russian car industry.

  7. Opel is better off this way, too, imo.

  8. This is good news. No, great news. GM’s strength is its global reach–NA has been a weak point for a long time. Sure, the Chinese market is strong, but Opel has such engineering talent that it would have been a grave mistake to cut it loose.

  9. I think it’s great that GM is keeping Opel in the family, their small-car (and small motor) expertise is needed in the GM organization. However, I can’t help but feel like this was all made available by US taxpayer money… the US allowed GM to declare bankruptcy, write off bad debts, and move forward. The US government is now a stakeholder in the company because of the scope of the bailout. Whle none of the checkes were written from the US treasury to Germany, it sure feels like GM is taking advantage of the US bailout to get out of its previous obligations to offload units like Opel to raise cash: the US government gave them the cash, allowing them to keep Opel.

  10. The Germans may be unhappy (whatever you do, don’t mention the war) but this news was greeted warmly in England.

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