General Motors' decision to abandon the sale of its European business Opel should come as no surprise. It would appear that GM and German Chancellor Angela Merkel are the winners in this chess game.
General Motors' decision to abandon the sale of its European business Opel should come as no surprise. As the company plunged into bankruptcy, there was talk that the board would keep hold of loss-making Opel.
GM was never keen on the deal with Canadian car-parts maker Magna and Russia’s Sberbank – it was forced into the decision by the Germans with the promise of $6.58 billion in state aid. GM was also reluctant to give away its technology to Russian automakers through Sberbank’s investment.
It would appear that GM and German Chancellor Angela Merkel are the winners in this chess game, while Opel’s 50,000 workers have been left out to dry.
GM bought time to clear up its mess – becoming the world’s largest industrial company to file for bankruptcy in the process.
Merkel needed a deal before the German elections – she got it on September 10 and she was re-elected for a second term on September 29.
"Unfortunately my suspicion seems to been confirmed that the decision to sell Opel to Magna was connected with the elections later that month in Germany," Opel's senior labor leader in Bochum, Rainer Einenkel, told Reuters.
For workers, its better the devil you know: Magna, while a successful auto maker for the likes of BMW, was an unknown quantity.
And Magna may be grateful for GM’s U-turn, some of its biggest clients were unhappy the car parts maker was going to compete head on with them. About 19 percent of Magna’s $23.7 billion in sales came from BMW; Magna assembles the X3 at its plant in Austria.
