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Opel Takes Over GM Europe Operations

New change brings focus on entry-level small cars.

by on Jul.22, 2014

GM folded its European operations in the newly branded Opel Group as part of its plans to return to profitability.

General Motors plans to make its European operations profitable are taking shape as the automaker has rebranded its European unit as the Opel Group and a renewed its focus on small, profitable cars.

The re-branding took effect July 1. The new organization is based in Rüsselsheim, Germany, and will also oversee Chevrolet’s operations in Russia and Cadillac in Europe.

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“Today, we are more than just Opel/Vauxhall,” Karl-Thomas Neumann, CEO of the management board of Opel Group, said in a statement. “With the Opel Group, we align our organizational and legal entity structure in Europe with the business operations. (more…)

GM Scales Back Alliance with France’s Peugeot

by on Dec.12, 2013

The Peugeot HR1 battery car concept. Peugeot itself now needs a charge-up.

General Motors is scaling back its once-promising alliance with French automaker PSA Peugeot Citroen – though it says it will move ahead with the partnership in a bid to trim the losses of its own struggling European operations.

The announcement comes barely a week after GM said it would pull its Chevrolet brand out of the European market to put more emphasis on reviving its German-based Opel division.  There had been growing questions about whether GM and Peugeot would continue the partnership they once said could save about $2 billion in shared costs by 2018.

News You Can Trust!

Moving ahead, noted a GM release, the program will continue to focus on the “main pillars (of) purchasing and logistics, focused on Europe, and extends into cross manufacturing.” But the partners will reduce the number of products they will jointly develop, going forward each now intending to produce one vehicle for the other by 2016.

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Some Hope at Opel as UK Agrees to Loan Guarantee

Still no support from Germany or Opel's German unions.

by on Mar.15, 2010

The viability problem remains centered in Germany where half of Opel's workers are.

Some small steps toward implementing the latest Opel/ Vauxhall “viability plan” occurred today in Europe as the UK government announced a €300 million loan guarantee to help secure Opel/Vauxhall’s operations in Britain.

Discussions with governments in other European countries continue, and Opel “is hopeful” that it will make similar progress.

In Spain, local management and unions reached an agreement to implement the planned restructuring measures at the manufacturing plant in Zaragoza. The agreement, which still needs to be ratified, calls for the elimination of 900 jobs there.

“Today marks an important step for the future of Opel/Vauxhall,” said Nick Reilly, Opel/Vauxhall CEO. “This shows significant progress in our efforts to secure loan guarantees from European governments and to get support from our employee representatives. We very much appreciate the support of Lord Mandelson and the British Government, which is a vote of confidence in our company. I’m also grateful for the Spanish government’s role in moderating the discussions between management and unions resulting in the important agreement reached early this morning.”

Last week, General Motors announced that it would triple the investment it was willing to make in its money-losing Opel/Vauxhall subsidiary from €600 million to €1.9 billion or ~$2.6 billion of the $5 billion needed to fix the company.   (more…)

German Government Out Bluffs Opel, So Far

GM triples offer, without firm commitments from E.U. governments. Maybe it's time to move toward bankruptcy.

by on Mar.09, 2010

Europeans appear content to let U.S. taxpayer-owned and subsidized GM carry the Opel restructuring burden.

Last week, General Motors announced that it would triple the investment it was willing to make in its money-losing Opel/Vauxhall subsidiary from €600 million to €1.9 billion or ~$2.6 billion of the $5 billion needed to fix the company.

Nick Reilly, CEO of Opel/Vauxhall, said that the latest offer – or more likely bargaining position already privately set forth to reluctant European governments – would now equal more than 50% of the overall funding required to keep Opel solvent and provide for the new products it desperately needs. The GM contribution would be made with both equity and loans.

GM has been seeking restructuring money from European governments since the fall of 2008 when it was becoming clear that it, along with its subsidiaries including Opel,  were insolvent.

Notable in its absence of support is Germany, where resentment still runs deep over GM’s refusal last November to sell Opel to Canadian supplier Magna and Russian Sberbank. At the time, GM said Opel was of strategic importance because of its engineering services and European presence.

Under its previous announced viability plan, Opel/Vauxhall had estimated funding requirements of €3.3 billion. However, as negotiations dragged on, an additional €415 million had been requested by the respective European governments to offset the potential impact of “adverse market developments.”

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Bitte!

GM says it now will contribute more than 50% of the overall funding.  As a result, the requested loan guarantees from European governments will decline in total from €2.7 billion to under €2 billion. This is still  a high risk proposition for governments.

GM claims remain no “potential liquidity risks” this year.

The latest GM gambit came – and went – without any immediate corresponding public commitments from European national governments in the countries where Opel/Vauxhall operates.

Thus far, the Europeans appear content to let U.S. taxpayer-owned and subsidized GM carry the burden without the involvement of European taxpayers.   (more…)

Opel Still Lacks Government Funding of €2.7 billion

GM unveils reorganization plan in bid to influence politicians.

by on Feb.09, 2010

GM is still running the Euro political slalom in hopes of loans before it runs out of cash.

The Chief Executive Officer of  loss making Opel/Vauxhall, Nick Reilly, today announced what he claims is a five-year €11 billion “Plan for the Future” that he says will update 80% of Opel/Vauxhall vehicle lines.

Reilly also said today that the external auditor, Warth & Klein, called the plan “sound and viable.”

Opel formally applied for loans or loan guarantees from the German government at the same time.

As part of the plan, Opel owner General Motors is looking for €2.7 billion through loans or loan guarantees from European politicians. Thus far the Europeans appear content to let U.S. taxpayer-owned and subsidized GM carry the burden without the involvement of European taxpayers.

This is a showdown not unlike the one GM faced in the U.S. when it sought government aid, that after much posturing, was eventually forthcoming. However, it took a bankruptcy to accomplish, something that is not being seriously discussed thus far, or at least publicly, in Europe for Opel.

GM has been seeking money from European governments since the fall of 2008 when it was becoming clear that it along with its subsidiaries were insolvent.

When it canceled the sale of Opel last fall to Magna and decided that Opel was strategically too important to the world’s second largest automaker, GM clearly placed itself in a weakened bargaining position.

“We have no reason to doubt that we will win support from those governments that have an interest in a long-term and sustainable future of Opel/Vauxhall, which in turn will provide long-term security for several thousand jobs across Europe,” a GM spokesperson told TheDetroitBureau.com. “We have been in very constructive talks with all European governments with Opel/Vauxhall sites and are confident that we will win support for our plan.”

GM has already injected €600 million into the new Opel/Vauxhall business. In addition, GM provided €650 million in advanced payments in January to ensure Opel solvency.

Critics claim that the only reason GM had the cash for such a transfer of funds is because U.S. and Canadian taxpayers have given it $50 billion. (Click here for that story.) They also note that the European Union central government is vehemently against bailouts of automakers, although it readily pumped billions into banks and other financial institutions last year.   (more…)

Opel Changes Lobbyist in Germany

Government money, in doubt, key to successful reorganization.

by on Jan.26, 2010

Hoff needs to "bring home the bacon" in terms of German financing of an Opel reorganization.

Opel CEO Nick Reilly today named a new member to Opel management. Effective February 1, Volker Hoff has been appointed Vice President, Government Affairs, for Opel.

In this capacity, Hoff will report to Reilly and succeed Tayce Wakefield who is  retiring from the company.

GM at the beginning of this year transferred to Opel another €650 million (~$930 million) in cash by prepaying its loss-making subsidiary for upcoming engineering services.

The money is needed to keep Opel afloat while GM continues its quest for European government financing to restructure Opel/Vauxhall.   (more…)

GM Pumps Another $1 Billion into Loss Making Opel

Reilly retains Opel CEO to responsibilities. Billions more sought from European governments as Opel will lose money in 2010.

by on Jan.15, 2010

GM last week gave Opel another €650 million (~$930 million) in cash to keep it afloat.

The Adam Opel GmbH Supervisory Board today formally appointed GM Europe President Nick Reilly as CEO responsible for all Opel/Vauxhall activities worldwide, a post he assumed back in November.

Hans Demant, is no longer Managing Director of Adam Opel GmbH and GM Europe Vice President, Engineering. Instead he becomes Vice President, Global Intellectual Property Rights.

The latest moves follow a filing with the U.S. Security and Exchange Commission that revealed GM last week had given Opel another €650 million (~$930 million) in cash by prepaying its loss-making subsidiary for upcoming engineering services.

Critics claim that the only reason GM has the cash for such a transfer of funds is because U.S. and Canadian taxpayers have given it $50 billion. They also note that the European Union central government is vehemently against bailouts of automakers, although it readily pumped billions into banks and other financial institutions last year.

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Money and Politics!

The money GM transferred — wherever it came from — is needed to keep Opel afloat while GM continues its quest for European government financing to restructure Opel/Vauxhall. GM has previously said that it will take as much as $4.8 billion to reorganize Opel. European state governments are considering requests for help at a pace that is best described as leisurely.

GM repaid a bridge loan from the German Government of €600 million ($860 million) after GM’s Board refused to go forward with the sale of Opel to Magna and Sberbank back in November. The German Central Government, regional government and the German Metalworkers union all had strongly supported the sale as a way to preserve German jobs.

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Opel CEO Search Off. New GM Euro Head Takes Job

Latest org chart sees two GM Europe groups, Opel/Vauxhall, Chevrolet Europe. More consolidating will follow says Reilly.

by on Dec.06, 2009

Many questions, few answers concerning Opel's future. New managment team is coming.

Many questions, few answers concerning Opel's future. New management team is coming.

In an unusual Saturday conference call from Rüsselsheim, Germany, the newly appointed President of General Motors Europe, Nick Reilly, said the Opel CEO search has been abandoned.

Reilly is taking the job, vacant since early November when Karl-Peter Forster left, and adding it to his President of GM Europe role.

General Motors will now have three presidents; one for the U.S., the newly appointed Mark Reuss; one for Asia Pacific and Latin America, the newly appointed Tim Lee; and Reilly as president of GM Europe.

Reilly will be accountable for the results of  both Opel/Vauxhall, while running it, and Chevrolet Europe, which will continue to be managed by Wayne Brannon.

More changes at GM are coming, said Reilly, who will announce a new Opel/Vauxhall management team next week. Reilly refused comment on any individuals. However, he continued to hint, without specifying where, that large cuts are coming.

The latest moves follow the resignation (or more likely firing) earlier in the week of Fritz Henderson as CEO, a post now assumed for an unknown length of time by U.S. Treasury Department appointee as Chairman of the Board,  Ed Whitacre.

In another hastily called press conference last week, Whitacre refused questions and read only a statement about Henderson’s departure. Whitacre promised he would answer questions, soon, about GM’s latest moves, but has since cancelled a press conference scheduled for the upcoming week.

Clearly, loss-making GM is undergoing more wrenching changes, and its strategy is still emerging, if there is any clear strategy at all.  What is certain is that the company is running out of time doing business in old ways  — if it is to return to profitability and have a remote chance of repaying the $60 billion it owes taxpayers.

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Adam Opel Auction Nearing End of the Beginning

Magna and Russian bank submit new offer for majority control. General Motors is now considering at least three offers.

by on Jul.21, 2009

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General Motors is pushing for assurances that it has a major voice in future product decisions.

Magna International Inc. and Savings Bank of the Russian Federation (“Sberbank”) have just confirmed that they have jointly submitted a revised offer to acquire a 55% interest in Adam Opel GmbH and Vauxhall that is “intended to assure the long-term viability of Opel.”

Under the offer, they will purchase 55% interest in Opel, which would be owned by a 50:50 Magna/Sberbank Consortium. This trims the size of the Russian holdings from 35% in the previous offer. General Motors Company would have a 35% interest, and Opel employees get 10% as part of a new labor agreement.

GM is said to be seeking a way to regain controlling interest in the future since Opel engineering is crucial to its ongoing product development needs. CEO Fritz Henderson said in June that he anticipated GM will maintain a substantial, but still minority stake in Opel.

At the very least GM is pushing for assurances that it has a major voice in future product decisions, but the company is not commenting on further details of the offers. Increasing the holdings of Magna, with which GM has extensive and long standing business dealings, might be one way to assuage GM’s fears.

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Merkel Mute on Opel’s Suitors after late Meeting

At midnight no word from German government on aid or sale.

by on May.27, 2009

Angela Merkel chats with Opel employees

A GM or Opel failure means the lights go out all over Europe. Potentially, 300,000 jobs could go.

German Chancellor Angela Merkel met this evening at the Chancellery with German and U.S. government officials, representatives from General Motors Europe and Opel’s potential buyers. Bidders for the cash starved Opel brand include Fiat SpA, Canadian autoparts supplier Magna International Incorporated, U.S. financial firm Ripplewood Holdings LLC, and possibly Chinese carmaker Beijing Automotive Industry Corporation.

GM spokesperson Chris Preuss told TDB, “We’re hoping Merkel will be confident enough with the bids to give GM a bridge loan to help until we can negotiate the sale.”

GM desperately needs a €1.5 billion loan just to keep its European operations running during the next couple of weeks; and is attempting to sell off all or part of Opel to help its global restructuring. A GM bankruptcy is expected at any time now in the United States, and it is complicating its ability to save its overseas operations.  About half of GM Europe’s 50,000 employees work at Opel in Germany. Vauxhall has 5,000 employees at two plants in England.

In order to facilitate the sale and help secure government loans, Opel’s supervisory board has approved a GM Europe plan to place its European plants, sales operations, patents and other assets, debt-free under German-based Adam Opel GmbH, Preuss said. GM’s Saab unit, currently in receivership in Sweden, is not part of this restructured, but cash short, Adam Opel.

There are “major questions” with all of the bids, German Economy Minister Karl-Theodor zu Guttenberg said today. And he would not rule out insolvency. In Europe, insolvency is similar to Chapter 7 of the U.S. Bankruptcy Code, which is not a restructuring of debt, like the one Chrysler is going through under Chapter 11, but simply a sale of assets and liquidation.

Senior GM officials have previously told TDB that a European insolvency is fraught with complexity and the risk of survival is exceptionally high.

GM’s negotiating position without government cash to keep Opel afloat is, obviously, weaker. GM would prefer to keep the race open so it can play the bidders off of one another.    (more…)