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German Opel aid tests EU rules

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opel-logosThe credibility of the European Union’s single market and state aid rules is at stake over Germany’s selective offer of taxpayers’ money to preserve Opel factories and jobs on its soil.

On the face of things, it looks like an open-and-shut breach of state aid rules. General Motors agreed last week to sell 55 percent of its European arm to a consortium of Magna and Russia’s Sberbank under massive pressure from Berlin.

German leaders have said publicly that they promised 4.5 billion euros in loan guarantees for the Magna-led bid — but not for rival bidder RHJ International — because it would preserve all four production sites and as many jobs as possible in Germany. The European Commission says:

state aid cannot be subject to additional non-commercial conditions concerning the location of investments and/or the geographic distribution of restructuring measures.

How Swedish is Saab now?

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Less by the hour if there is any truth to the story in Reuters that China’s SAIC is considering funding the iconic Swedish car brand’s buy-out from GM.

The deal, announced in August, was originally supposed to be a patriotic flag-waving exercise, in which a tiny Swedish supercar maker, Koenigsegg, would “repatriate” Saab from American control. The Opelisation of the Saab range would be stopped. A new generation of quirky cars designed by Nordic designers in square specs would be manufactured at the company’s historic (and splendidly named) Trollhattan factory. Saabs would again be as Swedish as a meatball or an Ikea “Billy” bookcase.

Saab to Koenigsegg – another go slow GM sale

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AUTOS SWEDEN KOENIGSEGGGeneral Motors doesn’t do deals in a hurry — at least when it is selling.

With the Opel sale grinding along, the U.S. automaker is also in the process of offloading its Saab brand to luxury sportscar maker Koenigsegg.

Germany wants GM answer on Opel

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OPEL-RHJ/Germany’s Economy Minister Karl-Theodor zu Guttenberg is boldly telling the German public that he expects a “fundamental decision” from the board of General Motors on the future of Opel next week.

He goes further, saying in a television interview that with offers from Canadian car parts manufacturer Magna and Belgian-based investor RHJ International on the table, it is tme for GM to “give in”.

Why the carmaker in front is cutting back

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Good news: global car capacity is being cut by 700,000 vehicles. Bad news: the company doing the cutting is the world’s most efficient manufacturer, Toyota.

Across the world, governments are pledging money to keep local plants open, mostly plants which have no long-term future, and which are far less efficient than the production line in Japan that Toyota is closing.

Germany should call GM’s bluff

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Recently bankrupted companies seeking billions in taxpayer handouts do not generally have the strongest hand at the negotiating table. Yet General Motors seems determined to drive a hard bargain over the bailout of Opel, its European car arm.

After months of tortured negotiations with the German authorities, GM is now threatening to reverse away from the deal. However, it appears to have few alternatives.

Driving an Opel round in circles

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Opel sign (Reuters photo)True to form, GM’s negotiator on the sale of Opel has poured cold water on expectations of a slam-dunk deal for Canadian car parts group Magna and its Russian backers.

John Smith (no relation, but I’m impressed by his negotiating) maintains in his blog that GM will compare the latest Magna offer with the proposal it has on the table from Belgium-based financial investor RHJ International.

Driving a hard bargain on GM’s Opel

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OPEL-RHJ/John Smith, General Motors’ chief negotiator on the sale of Opel, deserves a medal. But he certainly won’t be getting one from German Chancellor Angela Merkel.

Magna says it has reached an agreement in principle to buy a controlling stake in GM’s European unit. However, GM says it is going to think about the revised offer from the Canadian auto parts maker. It wants more details of the government financing package on offer before it can make up its mind.

Schaeffler/Conti feud puts Schroeder back on stage

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schroeder1Gerhard Schroeder is back at centre-stage, seven weeks before Germany’s general election. A corporate feud between industrial holding group Schaeffler and car parts maker Continental AG has given the former chancellor the chance for a comeback as the workers’ champion, although he no longer holds public office.

When Schaeffler, the biggest family-owned industrial company in Germany, bought control of Conti last August, the two sides appointed Schroeder as guarantor of the interests of Continental and its workforce, shareholders and other stakeholders under an investors’ agreement.

GM and Germany in Opel chicken run

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USA   By Alexander Smith and Paul Taylor

General Motors and the German government are playing out the Chicken Run scene from the 1950s James Dean classic film “Rebel Without a Cause”.
    Neither has leapt from their car yet, but there are growing signals from Germany that GM has its hand on the door handle and is preparing to drop its preference for financial investor RHJ in favour of handing control of Opel to Canadian auto parts maker Magna.
    GM has so far been in no hurry — although the U.S. car group has been doing its best to keep up appearances with a statement following this week’s board meeting saying it hoped to make a recommendation to the Opel Trust Board “shortly”. But German pressure has been rising as a Sept. 27 general election approaches.
    Germany’s eagerness to seal a deal with Magna — which has teamed up with Russian bidding partner Sberbank and automaker GAZ — is palpable.
    Berlin is ready to get its cheque book out to provide state aid for a deal with Magna. But has made clear this would be reconsidered if GM opted for Belgian-based RHJ, which Chancellor Angela Merkel’s government fears would cut more jobs. RHJ would be an unpopular choice in Germany, where a leading politician famously branded private equity buyers “locusts”.
    Berlin wants a deal closed in September and has set up an Opel Task Force to oil the wheels. Yet Opel workers are concerned that GM has been playing for time so that a decision is delayed until after the election.
    They fear that stalling until after polling day would make it easier for GM to put Opel through insolvency proceedings and shed some of its factories and staff at a lower cost.
    For Merkel, a deal on Opel’s future now would deprive her Social Democratic junior partners and rivals, who back Magna, of a potentially damaging campaign issue (“Merkel dithers while Opel burns”). But while it may yield short-term benefits, Berlin’s rush to hand Opel to Magna could yet backfire.
    GM’s chief negotiator John Smith has been vocal in his criticism of Magna’s bid, specifically citing concerns about the use of GM patents and Russian expansion plans.
    Magna’s Kremlin-backed partners operate in an opaque business environment where foreign players can suddenly lose control of a joint venture or face tax or regulatory obstacles.
    It may well be GM that blinks in the run-in with Berlin over Opel, but Merkel shouldn’t forget that whoever bails out first, the Chicken Run inevitably ends in a car wreck.

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