After months of negotiations, General Motors Co.
has finally made a decision about the fate of its Adam Opel GmbH subsidiary. But the jury is still out on whether GM has solved its European problem or simply created new headaches in selling 65% of the company to a consortium of Magna International Inc. (NYSE:MGA) and Russian affiliates along with labor groups.
The relationship between GM and Opel going forward will likely be similar to deals the automaker has had in the past with companies including Isuzu Motors Ltd., Suzuki Motor Corp. and Saab AB. In each case GM took a stake in a foreign company and then worked closely to share research and development costs or to put out jointly engineered models.
The success of such ventures in the past has varied; GM has divested its stakes in those other companies as it looked to cut ties with money-losing brands and build its own capital reserves. But none mattered as much as Opel does now. GM needs the German company if it hopes to maintain a large presence in Europe and now, thanks to Magna's partnership with Sberbank, expand its reach in Russia. Opel technology has also been used to help fuel GM's growth in Latin America.
But the relationship could be a difficult one. GM is used to calling the shots in such alliances, and indeed according to sources expects to have a prominent role in deciding future Opel product and R&D initiatives. For the new partnership to work as GM envisions it, Magna and the Russians might need to be willing to play a support rule.
Magna, a parts supplier that has moved toward contract manufacturing but has no retail history, has every reason to play nice. It is both a supplier of parts to GM, and will likely need to tap the automaker's retailing and operational know-how. For all of the promised government support, Opel remains a turnaround story, and Magna will be navigating new waters.
It remains to be seen how cooperative the Russians will be. If GM's worst fears expressed during negotiations are correct -- that Sberbank and its partners are involved in hopes of raiding Opel for its advanced technology -- they could prove to be difficult partners. GM's board has to hope that both Magna and Sberbank will be content to be partners in a revitalized Opel able to capture a growing share of the European market, and not itch to venture out too far on their own. -
Lou Whiteman
Lou Whiteman is a senior writer covering the automotive, transportation and industrial sectors. Follow him on Twitter @louwhiteman
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