A German view of the Opel-Magna debacle

[GMEurope]

Originally Posted by mbukukanyau

I agree, I had to have some fun with Ze germans, but, Angie Merkel needs some bashing, she was nowhere near fair to Ze american company.

There's no reason being fair with GM in the US as they aren't as well. I believe they go down, and I hope!

Why do you think, everything is running better then before after 10 mismanagement, stupid program policies and so on?

In the end, I understand the GM decission. I would be afraid as US GM, if I had to sell this US crap models in Europe. Nobody needs a re-badged Daewoo or Cadillac!

Only market for GM is Opel!

[62Lincoln]

Opel has been a cash burning machine in recent times. Since GM cannot use U.S. taxpayer funds to support Opel, what is their plan for funding daily operations, and then ongoing capital investment? Where do they plan to get the 1.5 billion to repay the German government? Are they going to credit markets (not likely)? Will they look to governments where the other plants are based for support? How do they support this operation?

[mbukukanyau]

Originally Posted by 62Lincoln

Opel has been a cash burning machine in recent times. Since GM cannot use U.S. taxpayer funds to support Opel, what is their plan for funding daily operations, and then ongoing capital investment? Where do they plan to get the 1.5 billion to repay the German government? Are they going to credit markets (not likely)? Will they look to governments where the other plants are based for support? How do they support this operation?

You Forget Opel sales are rising due to new product and GM North America is no longer held down by massive debt.
It also has a new BOD

[Dr. Show-Me]

Why do most GMI threads degenerate into personal attacks, and in this case, international personal attacks? Before you go insulting someone else, think how you feel when YOU are attacked. Can't we all just get along?
Germany initially did what the US government did, support GM to keep jobs. Like the Obama Administration exerting influence with GM, Germany tried to dictate what GM could, should, must do. It is my belief Germany went too far, in essence demanding that GM be reduced or eliminated in running Opel, while keeping most jobs in Germany.
This was not in GM's interest if it plans to be a global player, since this could have set back European sales for a decade. GM chose to keep Opel, to keep GM Europe a working entity.
Germany's strong-arm tactics may well result in negative outcomes for German workers, as there will be job loss of >20,000 workers, as GM restructures and eliminates production and workers. GM plans on spending 4.4 billion dollars in restructuring.
Use off strong-arm tactics frequently has negative consequences. It would not suprise me if most of the cuts happen in Germany, GM's revenge for punitive actions taken against them. Striking Opel German workers may well bear the brunt of the cuts coming, highlighting the jobs leaving for other EU countries who actually want GM cars, production facilities and jobs.

[eaton53]

Originally Posted by optiongm

I don't think we are paying the proper attention to this Opel deal. NOTHING in GM future is as serious to its financial survivability as a STRIKE by the Opel workers. This is similar to the last strike GM had back in Flint that cost billions. No one wins in these strikes!

Strike should equal closure.... nothing less.
Surely there is someplace in Europe that appreciates jobs.
And if not, move it to America. We'd be glad to have it.

Use off strong-arm tactics frequently has negative consequences. It would not suprise me if most of the cuts happen in Germany, GM's revenge for punitive actions taken against them. Striking Opel German workers may well bear the brunt of the cuts coming, highlighting the jobs leaving for other EU countries who actually want GM cars, production facilities and jobs.

Hey, you beat me to it!!

[Dr. Show-Me]

One of GM's most serious mistakes was agreeing to overly-generous labor contracts starting back in 1970. Through bk they have rectified that issue, and should do the same in its EU operations. They need to cut wages, benefits and jobs, keeping the production facilities in countries which WANT them.
And always keep in mind the "China price," which depresses wages throughout the world. Why should Europe be immune from this effect? They shouldn't be. Wages MUST come down.

[Fusion2.3H]

Nevermind....

I'm just glad that GM didn't sell Opel.

[62Lincoln]

Originally Posted by mbukukanyau

You Forget Opel sales are rising due to new product and GM North America is no longer held down by massive debt.
It also has a new BOD

The last article I read stated that Opel was still burning cash. Do you have some newer facts? I'm not disputing what you're saying, I just haven't seen that Opel is generating enough cash flow to support its operations, much less fund captial investments. In fact, I just read an article at Automotive News that stated that GM expects to need over $4 billion to fund Opel. So I ask again: where will they get the funds, assuming Opel is not generating positive cash flow, but rather is burning cash?

[mbukukanyau]

Originally Posted by 62Lincoln

The last article I read stated that Opel was still burning cash. Do you have some newer facts? I'm not disputing what you're saying, I just haven't seen that Opel is generating enough cash flow to support its operations, much less fund captial investments. In fact, I just read an article at Automotive News that stated that GM expects to need over $4 billion to fund Opel. So I ask again: where will they get the funds, assuming Opel is not generating positive cash flow, but rather is burning cash?

I remember reading opel sales are up somewhere

Opel sales up 43% for May 2009 in Germany

[stormwatcher]

Originally Posted by Dr. Show-Me

It is my belief Germany went too far, in essence demanding that GM be reduced or eliminated in running Opel, while keeping most jobs in Germany.

Since GM wasn't offering a nickel for the restructuring, why would GM remain in majority control of what was a bankrupt company? GM has new owners in the US too: the government.

Originally Posted by Dr. Show-Me

Germany's strong-arm tactics may well result in negative outcomes for German workers, as there will be job loss of >20,000 workers, as GM restructures and eliminates production and workers. GM plans on spending 4.4 billion dollars in restructuring.

On the other hand, the German government doesn't have to put $6 billion of taxpayers money at risk.

Originally Posted by Dr. Show-Me

Use off strong-arm tactics frequently has negative consequences. It would not suprise me if most of the cuts happen in Germany, GM's revenge for punitive actions taken against them.

If GM goes for revenge after the German government provided the emergency loan which is the only reason GM can still resume control of Opel, then GM is deluded.

The whole Opel episode was a mess but it has to be kept in context of the unprecedented turmoil of the last 12 months. And with that in mind, GM has to work on returning Opel to profitability, and to do that, that will require working with European governments, including Germany, to do so. I'm sure the German government is somewhat embarassed by all of this and will be more then willing to assist GM.

[jalberda]

Originally Posted by mbukukanyau

I remember reading opel sales are up somewhere

Opel sales up 43% for May 2009 in Germany

Sure, Opel sales in Germany went up this year. This is because the German government had a hugely effective C4C (they kind of invented it I guess, the rest of the world (including the US) has copied that principle).
That C4C has come to an end now, so sales in Germany, Europe's biggest car market, will come down considerably.

More relevant are EU+ EFTA sales figures for 2009. YTD (incl october) GM Europe sales are down 12,5% while total car sales are down 4,8%. So Opel is doing far worse than average in Europe. VW and Ford are winning market share, GM is losing it. (source: www.acea.be, statistics).

The end of the German C4C programma and the now negative sentiment about GM will hurt Opel sales in its biggest market (for 2009) in the coming quarters.

[msitter]

Originally Posted by jcgable

The German business model has many attractive benefits, as does the American business model. This isn't a forum to debate the macro-economic policies of governments.

How can you debate the article without talking about government policies. This forum refuses to acknowledge or even allow that the present regime has taken over 30% of the US economy and is poised to increase that to 47%. Any discussion of anything to do with GM, Chrysler, the banks or Wall Street is little more than fluff if you don't point directly back to the policies of the US or EU and their attempt to rewrite the rules of capitalism. Otherwise the discussions here are little more than sophomoric arguments that my Chevy can beat your Ford.

[mbukukanyau]

Originally Posted by jalberda

Sure, Opel sales in Germany went up this year. This is because the German government had a hugely effective C4C (they kind of invented it I guess, the rest of the world (including the US) has copied that principle).
That C4C has come to an end now, so sales in Germany, Europe's biggest car market, will come down considerably.

More relevant are EU+ EFTA sales figures for 2009. YTD (incl october) GM Europe sales are down 12,5% while total car sales are down 4,8%. So Opel is doing far worse than average in Europe. VW and Ford are winning market share, GM is losing it. (source: www.acea.be, statistics).

The end of the German C4C programma and the now negative sentiment about GM will hurt Opel sales in its biggest market (for 2009) in the coming quarters.

But in the long run Opel will remain in GM hands and a new competitor will not be empowered. Also, C4C in German would have not helped Opel if they still had lousy products.

[jalberda]

Originally Posted by mbukukanyau

But in the long run Opel will remain in GM hands and a new competitor will not be empowered. Also, C4C in German would have not helped Opel if they still had lousy products.

True about the new competitor. Not true about the products. The Ingisnia is the only really competitive car right now. The Astra has not been launched yet, and so far, early reviews don't declare it as a game-changer. The present Astra is dead in the water, the Corsa is outclassed by the Fiesta and Polo. The Agila is just sad. They got some sympathy sales in Germany probably, but that's over now.
The C4C even helped Chevy sales, and those cars are the bottom of the barrel.