GM’s U-turn on Opel Is No Big Surprise

We might as well say it right at the start: General Motors’ decision not to sell Opel really does come as no surprise. When a business genuinely needs (or wants) to sell off its assets, it gets on with completing the process. After ten months of prevarication and “yes, but”s extracted from them with great difficulty, and for purely political reasons by Merkel’s German government, GM’s board of directors has finally decided to call off the sale of its European subsidiary to Magna-Sberbank.

A lot has happened during those ten months. First of all, the worst of the international financial crisis seems to be behind us. GM, which was on the edge of the abyss at the beginning of the year, is now in much better shape, thanks in particular to a change brought about by its own bankruptcy. Thanks to America’s bankruptcy law (the notorious “Chapter 11”), the debt-riddled GM group was able to restart its finances from scratch in June. The U.S. federal state became GM’s principal shareholder, at a cost of billions in financial aid. The new GM no longer has much in common with the former General Motors Corporation. Despite his frequent denials, it is obvious that Barack Obama’s government has had a major influence on its decision, which among other things will avoid a transfer of technology to Russia.

After Angela Merkel’s re-election as German Chancellor, it had become increasingly clear that the Magna scenario was not going to happen. The Canadian parts manufacturer was still doing the rounds of the various factories to negotiate its restructuring plans, but there were a number of events which tipped the balance in favor of the status quo.

The final blow was delivered by the European Commission, which forced the German government to declare in writing that the €4.5 billion in public aid was not exclusively reserved for Magna. When a German minister calculated last week that the restructuring of Opel would cost at least €1.5 billion if it were to remain in the hands of GM, the game was up.

After months and months of uncertainty, Opel workers are going to know their fate at last. That will be some small consolation — albeit a painful one.