Opel decision divisive, not decisive

Who will end up owning Opel is turning more and more into a brawl along party lines. Officially, the seller is GM. The final arbiter will be the German government, because they foot the bill to the tune of billions. Trouble is, the German government is divided. It is made up from a coalition between the center-right CDU and the center-left SPD. Both run the country. Both are on each other’s throats. Both are in a bitter fight for votes in the September national elections. Several states are also up for grabs. It’s a “super election year.” Both have their favorites. So who will it be?

If you ask the SPD and their union buddies, then the winner is clear: Magna and Sperbank. Klaus Franz, Head of the Opel workers council urges for a quick decision for Magna. He thinks, China’s BAIC is used by a high stakes poker playing “GM which wants to drive up the stakes,” reports Focus. Metal workers union chief Huber called Russia’s Putin and reports that both “have no doubts that Magna and their Russian partners will be approved.”

If you ask the CDU, then they have ever increasing doubts about Magna and their Russian partners. Autohaus reports that the CDU warns against too much haste, and recommends “to study the offer of BAIC carefully.”

The German government is clearly playing for time. A meeting with the GM executives in Berlin to discuss offers for Opel, left German Deputy Economy Minister Jochen Homann seven less decisive.

“Under no circumstances will there be a decision by next week,” Homann said to Bloomberg. “I wouldn’t want to predict how this will end” in terms of GM’s selection of a buyer. BAIC’s bid contains “interesting elements,” Homann added.

Bloomberg is already playing “what if” and decides: “Beijing Automotive Industry Holding Co. may be more likely to get indigestion than a boost in earnings if it buys General Motors Corp.’s Opel unit.”

BAIC would have to run an overseas arm twice their own size. It would also need to adapt production lines and learn about new technology before it could make full use of acquired systems in its own cars.

“Technology is not bread you can buy, chew up and digest quickly,” said Ricon Xia, a Daiwa Institute of Research analyst. “Beijing Auto would need to spend years, if not decades, to make full use of Opel’s know-how.”

The same is even more true for a Canadian parts maker and their moribund Russian partner.

Willi Diez, an analyst at the Institute for Automobile Economics in Geislingen, said in a report on Wednesday that Opel likely wouldn’t have the critical mass necessary to survive if it joins forces with Magna.

Instead, Diez said in his report that Opel would be better off staying with GM, joining BAIC, or even Italy’s Fiat SpA. According to Diez, BAIC at least brings the potential to open the rapidly growing Chinese market to Opel.