The contest between the three main bidders for Opel appears to be descending into horse-trading over who can guarantee the least job cuts in the short term, a UK-based analyst said in a research note.
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“This is no way to guarantee the long-term sustainability of Opel as a going concern as a company that can compete in the cut-throat Western European car market,” wrote Global Insight’s Tim Urquhart.
“Opel has a decent range of passenger cars… [b]ut there is overcapacity and inefficiency inherent in Opel and Vauxhall’s current structure and the insistence on trying to guarantee as many jobs in Germany, while understandable from a political point of view, would appear to be a severely limiting factor to any bid.
“In addition it is almost certainly the death knell for any meaningful production capacity to be retained by Opel and Vauxhall outside Germany.”
He said reports indicate that, despite the general level of support among German politicians for the Magna bid, the Christian Democratic Union side of the coalition government, which includes Merkel, is less keen as the initial Magna plan included heavy potential job losses in traditional CDU-supporting regions such as Bochum.
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By GlobalData“This split between the CDU and their coalition partners Social Democratic Union could prove to be a severely limiting factor in reaching a quick decision on a winning Opel bidder and see the contest descend further into a battle to win voter support in advance of the upcoming German general election.
“While GM will make the final decision on a winning bidder for Opel, realistically this will have to be done with the agreement of the German government.
“With bankruptcy imminent for GM’s parent company in the United States, a rapid conclusion is desirable, although bridging finance to keep Opel alive in the event of GM’s bankruptcy has been agreed.
“If Opel is to survive, the contest to choose the correct partner for the company must not descend into a simple contest of political point-scoring and job preservation at all costs. However, this appears to be the direction in which things are heading.”
On the emergence of Beijing Automotive as a late bidder, Urquhart and colleage Paul Newton opined: “The late entry by a Chinese carmaker is likely only to serve to complicate the decision on the preferred bidder for Opel and make the process even more difficult for GM’s management and the German government.
“Fiat’s late attempt [reducing its state guarantee request by EUR1bn] to improve the attractiveness of its bid is an indication that it is now lagging behind Magna’s rival bid in terms of perceived support.
“The late bid by Beijing Automotive is unlikely to be accepted, especially as it is unclear why the company missed last week’s initial bid deadline.
“Instead, Fiat faces a late attempt to get its bid back on track as Magna’s bid now appears to be favoured option, with Fiat’s CEO claiming his company’s bid should be chosen as the best ‘industrial solution’.”
