Now raising intellectual capital

Opel keeps hope alive


With General Motors in a Washington-guided bankruptcy and car makers around the world benefiting from government subsidies, politics has become firmly intertwined with the fate of the global auto industry. Even so, the deal reached in late May between General Motors and a group led by Magna International for GM’s European arm, Opel, smacked of trying too hard to come up with a politically convenient solution.

So the news that GM is now talking to other potential bidders is a welcome sign. Among the bidders are RHJ International, a publicly traded Belgian spinoff of the American private-equity firm Ripplewood Holdings, and Beijing Auto.

The German government had earlier favored the Magna proposal over one from Fiat because the bid stood to preserve more Opel jobs ahead of a September general election. And by having Russian partners, the bank Sberbank Rossii and GAZ, the carmaker, a Magna takeover promised to cement ties with an important market for Germany as well as Europe’s fastest-growing auto market.

But cutting costs and reducing capacity are the priorities for any automaker. And these Russian partners are far from ideal. GAZ is weighed down by $1 billion in debt. A 2006 GAZ acquisition, of British van maker LDV Group, has gone very badly, with LDV recently placed in administration.