GM’s Opel Sale Crashes

What once looked liked a done deal now suddenly isn’t. General Motors’ board has decided against selling Opel, it main European division, to Magna, a Canadian part supplier, which had partnered with Sbrebank, a Kremlin-backed bank, along with GAZ, a Russian carmaker, and the Opel union. Germany wanted this deal, but GM’s new board increasingly didn’t.

There’s been plenty of bobbing and weaving in this thing. In the New York Times, Bill Vlasic has the basic facts but next to nothing about what GM’s board has in mind, where the auto task force is on this, what the view from Treasury is (GM’s majority owner), nor anything beyond vague indications that GM now thinks it’s better off keeping Opel to bolster its international presence and maintain a source of small cars platforms, as well as fuel-efficient engines—both of which GM will need if it plans to meet the EPA’s new CAFE standards of 35.5 MPGs by 2016.

This leaves me free to speculate. Why not follow the money? Germany has $6 billion in loans to put into the deal. It’s certainly possible that GM’s board decided that such a generous sum might be better going into GM’s post-bankruptcy coffers than those of some untested Canadian-Russian hybrid. But then again, GM might just be getting cocky. Or this could be a pre-emptive strike aimed at Sergio Marchionne and Chrysler, and their bring-the-small-Euro-car-to-America-plans, scheduled to be be revealed...tomorrow! Of course, given than the government owns almost 10 percent of Chrysler, you’d think there’d be orchestration of such events. And perhaps there is...

UPDATE: Oh no. The dreaded “R” word has crept back into GM’s lingo: restructure. Here’s CEO Fritz Henderson, in the official release:

““While strained, the business environment in Europe has improved.’ Henderson said. ‘At the same time, GM's overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured. [my emphasis] We are grateful for the hard work of the German and other EU governments in navigating this difficult economic period. We're also appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement.’”

From 2005, GM restrcutured its way right into bankruptcy. For now, I’ll stand by my analysis: GM wants Germany’s billions. And given prevailing calculations about its ability to pay back the investment of the American people in its ongoing operations, probably figures that free money is...well, free money, just with a German accent.

Fritz is now sounding a lot like Rick Wagoner, GM’s deposed CEO. Isn’t GM supposed to be re-inventing now, not restructuring?