Reversal of fortunes sets back Moscow’s plans

[Hurricane]

Reversal of fortunes sets back Moscow’s plans
By Catherine Belton

Published: November 4 2009 23:30 | Last updated: November 4 2009 23:30

Russia’s bold gambit to build a partnership with Opel and win access to technology vital for transforming its battered car industry lay in tatters on Wednesday.

Russia this year seized on the plans to sell GM’s European arm as a unique opportunity to gain access to much-needed technology for its outmoded car industry and rescue it from the brink of bankruptcy.

Sitting on $200bn in oil windfall funds, for once Russia had the financial muscle to help fund the deal, as GM itself teetered towards bankruptcy. Magna meanwhile had pledged to help Opel grow out of the crisis by winning it entry to the Russian market.

But GM’s sudden reversal as its own fortunes start to recover is a significant setback for Russia’s plans to build equity relationships with established international companies to help develop strategic industries, according to Chris Weafer, chief strategist at Uralsib investment bank. “Without this it is going to take a lot longer for the Russian industry to become as competitive as its international peer groups,” he said.

The survival of the Russian car industry has been hanging in the balance for most of this year as the economic crisis ripped through demand and cut sales by half. Avtovaz, the country’s biggest carmaker, has already eaten up Rbs25bn ($800m) in government assistance and says it needs more to stave off bankruptcy and pay off Rbs47bn in short-term debts.

Gaz, Russia’s second-biggest carmaker, owned by Oleg Deripaska, which had originally been seen as Magna’s industrial partner for producing Opel cars in Russia, has been in talks on restructuring about $1bn in debts for most of this year.

One leading Russian politician lashed out GM’s U-turn as politically motivated. “It seems the motivation was very simple: to keep Opel within the political and economic sphere of influence of American business and American politics,” said Oleg Morozov, a senior member of United Russia, the Kremlin’s ruling party.

Mr Putin’s spokesman said it was too early to claim the decision was political, but the Russian government would press ahead with plans to save the car industry. “We were of course interested in this deal and we had put a great deal of work into preparing for it. On the other hand, we have a programme for the support and restructuring of the car industry, which will be carried out.”

Full text here: http://www.ft.com/cms/s/0/24c0d38e-c...44feabdc0.html

[CaptainDan]

"Ve vill bury you."

[eaton53]

One leading Russian politician lashed out GM’s U-turn as politically motivated. “It seems the motivation was very simple: to keep Opel within the political and economic sphere of influence of American business and American politics,” said Oleg Morozov, a senior member of United Russia, the Kremlin’s ruling party.

Well, duh!!
Get your own car industry, you lazy bum!

[patrickbec]

Originally Posted by eaton53

Well, duh!!
Get your own car industry, you lazy bum!

Yeah, stinkin vodka swilling neo-Commies, go and develop your own damn car industry, even if its a T-72 tank modified with a child safety seat. Just keep the floor mats away from the accelerator's cast pig iron pedal.

Boy I feel better now.

[Exploder]

Get your own car industry, you lazy bum!

Hah, America itself should heed that advice.

[steinravnik]

Originally Posted by CaptainDan

"Ve vill bury you."

[vanshmack]

I was glad to see this deal fail, though I don't see the soviets, err, Russians, as a big threat to American industry. They're certainly not our friends, to be sure, and no "reset button" will change that.

What they do have is a ruling class of thugs that is every bit as addicted to cold hard cash as their western counterparts. The Opel-Magna deal was just another cookie jar from which the government bureaucrats could skim cash.

These guys are more like us then we'll ever want to admit. They're just more blatantly thugish about it.

[mbukukanyau]

All I can say is, I hope our politicians pay attention to this stuff. Seriously. They seem so out of touch. They were willing to let Opel out of our hands.
Which has me thinking, perhaps killing Hummer and Volvo might be a good thing.

[Quest]

Don’t be surprised to see GM, Magna and Gaz collaborate on a Russian joint venture in the future. An arrangement that would be outside of GM Europe. The three tried to form an alliance in Russia before, only a few years ago, until Gaz’s financing fell through and it had to pull out.

Note the muted responses from all the parties concerned on GM keeping Opel Vauxhall. The only one that's screaming are the German Unions and the politicians in the affected German jurisdictions are paying lip service to the rank and file.

Stay tuned...

[carbarrister]

"Don’t be surprised to see GM, Magna and Gaz collaborate on a Russian joint venture in the future. An arrangement that would be outside of GM Europe."

I think that this is very insightful. Remember, Bo Andersson was hired by Deripaska not only for his purchasing expertise but because of his GM/Opel connections for GAZ.

[Dr. Show-Me]

I don't see this as political at all. This is business, pure and simple. If GM had lost control of Opel, after losing Saab, their future in Europe was zero. To start all over could take a decade to get back to where they are right now. So it was business, only business.

[V8GMT360 Guy]

As long as I never hear something like "Lada: A division of GM Europe" I think we'll be fine

[hunchman]

Originally Posted by patrickbec

Yeah, stinkin vodka swilling neo-Commies, go and develop your own damn car industry, even if its a T-72 tank modified with a child safety seat. Just keep the floor mats away from the accelerator's cast pig iron pedal.

Boy I feel better now.

Do you wonder around your trailer in your bare feet sipping on mountain dew and eating ketchup sandwiches by chance? The cold war is over and communism is dead in Russia.

[mbukukanyau]

Originally Posted by hunchman

Do you wonder around your trailer in your bare feet sipping on mountain dew and eating ketchup sandwiches by chance? The cold war is over and communism is dead in Russia.

But tyranny lives on in Russia.

[GM_RU]

Tyranny? WTF are you all talking about?

What tyranny? We are more free than you. All our managers at Saint-Petersburg plant who work for GMNA, for opel, for GMDAT - all of them say one thing - it is so easier to breath in Russia than in States or EU.