Magna International pulled a bold move when it declared its intention to buy Opel from General Motors, bridging the gap between component supplier and contract manufacturer on the one hand, to independent automaker on the other. In the process, Magna jeopardized its relationships with Germany's largest automakers, including Volkswagen and BMW, who had been keen to do business with a supplier; less so with a direct competitor.
Daimler sees it another way, however. Not only will Magna continue building the legendary Gelandewagen for Mercedes-Benz at its facility in Graz, Austria, but Mercedes also announced that the contractor will make the aluminum body panels for the recently-unveiled SLS AMG supercar. For its part, Magna is satisfied to receive the business, naturally, while Mercedes and Daimler chief Dieter Zetsche says he sees no conflict of interest. Deliveries of the SLS are expected to begin next spring.
When GM decided to hand 55% of Opel to Magna, you didn't think the Belgians were just going to have some waffles and call it quits, did you? Oh no. Belgium's prime minister made a call to the EU president about the deal, and the EU Competition Commissioner Neelie Kroes told a Belgian newspaper, "If something happens against the rules, I will take action."
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Finally, after what seems like an eternity of protracted negotiations, bickering and stalling tactics, General Motors has agreed to sell a majority stake in its European operations to Magna International and its Russian financial partner Sberbank. Under the terms of the deal, 55% of Opel and Vauxhall will be owned by MagnaSberbank; The General will hold on to a 35% stake and employees of the two companies will hold the final 10 percent.
Naturally, the European automakers will continue to offer the recently redesigned Astra and Insignia, and future technologies – such as the extended-range electric powertrain that will be used in the upcoming Ampera – will be shared between the U.S. and European companies.
According to Automotive News, there are still strings attached to the deal and the German government doesn't expect anything to be completely finalized until after the next set of elections scheduled to take place in Germany on September 27, so the saga is likely to continue. Click past the break for the official statement from GM.
While General Motors was going through its 42 day bankruptcy period, one of the stories that didn't receive much play was the sale of GM's Opel brand. The major players in the Opel sale appear to be the German government, Canadian supplier Magna and Belgian private investor RHJ International.
The German government was reportedly willing to front 3.4 billion euros toward the deal, as long as Magna was the buyer. Magna has said that it wouldn't close any German factories if it purchased, making the supplier attractive to the German government. But Magna is tied to a Russian company that would receive GM's intellectual property if the sale is made final.
The Daily Mail in the UK is reporting that the General would rather push Opel into insolvency than sell to Magna. When GM went into Chapter 11, Opel was placed in a trust. Now that GM is free of bankruptcy and sales have picked up (slightly) in Europe, the Detroit-based automaker could possibly again own Opel by working through German insolvency laws. To make matters a bit more complicated, Opel's unions are threatening to demand pay raises and bonuses if the company isn't sold to Magna.
The sale of Opel looks like it's becoming more of a mess than originally anticipated. The status of Opel could become clearer by the end of this week, with a Opel on the agenda during a major board meeting at GM today and tomorrow.
The battle for Opel has added another front: Opel labor unions at two of the company's German factories retracted an agreement made last year to forgo vacation bonuses. The move demands that General Motors pay the laborers €70 million ($100.2M U.S.) by next week, the amount that they agreed to give up when GM was trying to rescue itself. Workers at two other Opel factories in Germany are expected to make the same move some time this week. The workers want GM to sell to Magna, and if The General doesn't make its intentions plain soon, the next step will be for Opel labor to demand the wage hike they waived last year, which would see the automaker owe another several hundred million euros.
According to Automotive News, GM's board met to discuss which bidder, Magna or RHJ, it would go with, but instead of making a decision it sent its lead negotiator back to Germany to talk to government officials. As of last week, there were rumors of GM wanting a buyback option for Opel, which could get GM quickly back into Europe when the company restores its fortunes. The option seemed to make RHJ the leading bidder, but not the one German government or labor wants.
If RHJ wins, it will get no state aid. If Magna wins, it has been pledged €4.5B ($6.4B U.S.) in government loans. The disadvantage could cause RHJ to deal with Opel drastically, which would greatly displease a whole lot of Germans. Perhaps that is why there is now talk of GM not selling Opel at all, instead looking to raise $4.3 billion to keep Opel in the family. With GM barely out of bankruptcy, and with economies still shaky, observers aren't sure where GM would get that kind of money. It is thought that GM will announce its intentions in the next day or so.
General Motors was meant to decide who would be the winning bidder for Opel last Friday. But it didn't. Instead, GM asked the German government for more information on federal financial assistance available to buyers. The German government would like Magna to take over Opel as it vowed to retain a huge chunk of jobs in Germany, but GM has given every indication of preferring Belgian investment fund RHJ.
GM wants to know how much money RHJ would get in case it was chosen to buy Opel. It looks like GM still has issues with Magna buying Opel and is looking for a way to choose RHJ and save at least a little face with the German government. If RHJ can get an attractive financial package from the feds, it can also save more jobs than it might be inclined to otherwise, and GM doesn't have to worry about Russian competitors using its own technology.
The German government wants none of it, though. It has called on the United States government to get GM to make a decision. That isn't likely to happen, but it shows how intense things are with Opel, politicians, labor and upcoming elections. On a side note, the BBC reported that part of GM's plan could include a buy-back option for Opel, which, if true, would probably make a lot more sense for RHJ than Magna.
Like most other suppliers, Magna International and its contract manufacturing unit Magna Steyr are pushing hard to diversify into the area of hybrid and electric powertrain components and systems. In January at the Detroit Auto Show, Magna International and Ford announced a collaboration on a Focus-based electric car that will go on sale in 2011. Here in Geneva, Magna Steyr combined that electrification effort with a reminder that the company is capable of doing complete vehicle engineering and manufacturing for other automakers. The Mila EV is a concept meant to illustrate a new vehicle platform that Magna has developed and optimized for electric drive applications. The modular system is able to be adapted to different body styles and even different powertrain configurations. It can be built as a pure EV or with a parallel or series hybrid setup. Magna is offering it to any manufacturer that would like a turn-key EV platform solution in order to get a car into production quickly.
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Amongst all of the various concept and production-ready vehicles that major automakers will unveil this week at the Geneva Motor Show is a new concept from auto supplier Magna Steyr called the mila ev. This electric machine was designed from the start to eschew the carbon-spewing, petroleum-chugging internal combustion engine, so no compromises stemming from the conversion of a previously-gas-powered vehicle were necessary. For this reason, Magna says its concept is immediately ready for series production at its own manufacturing plants and could be configured to accept a natural gas, hydrogen fuel cell or hybrid powertrain.
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After nearly three years of rumors and speculation, the new jacked-up MINI SAV will finally make its debut, according to Autocar. The Brit pub is reporting that the MINI 'ute is bound for Paris, with an on-sale date sometime in 2010 and sporting a five-door design.
Questions still remain about what platform the new all-wheel-drive model will be based on, with sources suggesting it will either be based around the Clubman's architecture, making use of a new upper-body structure, or the current Cooper's chassis, using the front end and employing a new floorpan to accommodate the AWD system and new seating positions. Regardless of what's underpinning the SAV, MINI has to justify the R&D, so if the biggie-sized MINI proves successful, there's a possibility that a front-wheel-drive variant will be offered on the same chassis, oxymoronically dubbed the MINI "Maxi."
Production is expected to begin late next year at Magna's factory in Graz, which currently produces the X3. And with BMW shifting production of its entry-level SUV to the U.S. sometime next year, MINI will have the manufacturing capacity to bring its sales over the 340,000 mark.
Porsche has announced that production of its Boxster and Cayman models is to shift to component supplier Magna Steyr's facility in Austria beginning in 2012. Last year the contract with Finland's Valmet to assemble the two associated mid-engined models was extended through 2012, after which the terms will expire and Magna will take over.
Porsche CFO and deputy chairman Holger P. Harter stressed that the decision was not a vote against Valmet – which has to date built over 200,000 vehicles for Porsche – but rather the result of several elements that Magna brought to the table: firstly, Magna's production is scalable so that it will only manufacture what Porsche's own factory in Zuffenhausen (where the rear-engined 911 series is made) cannot handle. Secondly, Magna is able to assume some development responsibilities along with the final assembly. Thirdly, Magna's proposal was more financially attractive (read: cheaper) than Valmet's. And finally, Magna already supplies various components to Porsche – including convertible roofs and body panels – creating the opportunity for future synergies between Porsche and various Magna subsidiaries.
