Randomly Noted

GM, whose board has been meeting the past couple of days, has scheduled a press conference tomorrow (Thursday) about Opel. The briefing will take place at 12:30 GMT in Berlin. My bet: Opel will be sold to the consortium comprising Magna International, the Canadian-Austrian auto supplier, and Russian interests. Why? Because GM’s new post-bankruptcy board doesn’t have the stomach to pump billions more dollars into the once-strong European car business, and that’s what it will take to revive Opel. The board and management dearly want to keep Opel; GM needs a solid European presence to remain a truly global player. But Job 1 (to borrow an old motto from a healthier rival) for GM is to focus on repairing its U.S. operations while continuing to generate growth in such major emerging markets as China and Brazil. Opel has been a laggard for years; selling it to Magna would solve a short-term problem for a GM which needs as few distractions as possible. With Saab in the arms of an odd Sweden-China couple (“super car” firm Koenigsegg+Beijing Automotive); Hummer en route to a sale; and Opel out of sight and mind, GM could rededicate itself to designing, engineering, making and marketing vehicles people want to buy. All this said, it will mark a sad turning point for GM and Opel if the latter is sold. Magna & crew will be hamstrung by their politically correct, financially foolish vows to save German jobs; the pledges got them the German establishment’s support and public financing but spell balance-sheet doom. (What Russian oligarchs – harboring ambitions for their own auto industry – will do with Opel remains to be seen.) In a few years, a Magna-owned Opel will still be hobbled by high labor costs, and unless Magna recruits a strong, seasoned, focused boss unbeholden to the interests behind the consortium, Opel will continue its decline. GM meanwhile will look wistfully at its Opel decision for many years to come. Occasionally, it will flirt with the concept of tying up with another auto maker with European ambitions. It will never be global again.