MOSCOW. (RIA Novosti economic commentator Oleg Mityayev) - The board of directors at General Motors surprised the world on November 3 by announcing that it "has decided to retain Opel and will initiate a restructuring of its European operations in earnest."
Months of negotiations between the U.S.-based auto manufacturer and a consortium including Canada's components manufacturer Magna and Russia's largest state lender Sberbank has produced zero results. GM is not selling.
The deal was first announced in May this year, and in September GM gave its tentative agreement to sell a 55% stake in Opel to the Magna-Sberbank consortium (27.5% each). The buyers promised to invest 500 million euros in the ailing German company. The deal was to be financed by Sberbank, which was expected to eventually sell its stake to a Russian automaker, most likely the GAZ Group, Russia's second largest automaker.
However, GM has restructured its business through voluntary bankruptcy and received billions of dollars in state assistance, which placed it under state control.
The GM managers who attempted to liquidate loss-making assets several months ago have left the company, and the new top directors appointed by the White House have more ambitious plans. They do not want GM, once the world's largest automaker, to degenerate into a scaled down regional company working only in the North American market.
The probability loomed large several months ago, when several other contenders apart from Magna-Sberbank sought to buy Opel. One of them was Italy's Fiat, which was prepared to buy GM plants around the world if they were sold cheaply.
However, state assistance has helped GM grow stronger, and the global automotive market has in the meantime resumed some growth. In this situation, GM voted against selling its technology to potential rivals. It said the sale of Opel would give its rivals access to intellectual property GM wants to use in its own new projects.
This is GM's primary reason for reconsidering its decision to sell Opel.
It will now have to pay to restructure the unprofitable German company because the U.S. administration will not finance its European division. In addition, next year's European market sales estimates are quite weak.
GM will also have to "work with the European labor unions to develop a plan for meaningful contributions to Opel's restructuring."
The GM decision has come as a hard blow to the German government, which sponsored Opel's sale to the Magna-Sberbank alliance. Ironically, German Chancellor Angela Merkel heard the news aboard her plane while departing Washington, where she had addressed the U.S. Congress and met with President Barack Obama.
The German government pledged the 4.5 billion euro ($6.7bn) aid only if the preferred buyer for Opel was the Magna-Sberbank alliance. In response, Magna promised to keep as many workers at Opel's German plants as possible.
Also, the deal was one of several mutually beneficial German-Russian investment projects.
The German government has expressed its official regret over the GM decision and said it would demand the repayment of the 1.5bn euro loan it had issued to save Opel.
Magna will not become a major independent European producer, while Russia will not receive cutting-edge technology together with Opel.
The Russian automotive industry will continue to comprise assembly plants from GM, Ford, Toyota, Volkswagen and other foreign automakers, as well as several traditional Russian models whose future looks unpromising amid the global economic downturn. The opportunity to take advantage of state of the art automotive technology has been postponed indefinitely.
On the other hand, Russia will not have to deal with the potential risk arising from Magna's attempts to create a new European automotive company based on Opel. The Canadian producer planned to increase Opel sales in Russia to one million cars annually, a plan that looked overoptimistic since only 2.4 million cars were sold in Russia's best year, 2008.
GM said on November 3 that it "hopes to build on its already significant business in Russia and to resume work directly with GAZ to contribute to both the modernization of its operations and the joint development of the Russian vehicle market on a mutually attractive basis."
It was announced last month that GM would increase production not only at its St. Petersburg plant but also at the Avtotor's assembly plant in the Kaliningrad Region.
The opinions expressed in this article are the author's and do not necessarily represent those of RIA Novosti.
