The Opel deal

It was exactly what the German government, labor unions, and Opel workers wanted: a deal from US car manufacturer General Motors to sell Opel to Canadian car parts manufacturer Magna and its Russian backer Sberbank. The news that the deal would go through ended weeks of speculation about what would come next for the German-based Opel.

Talk of a possible deal with Brussels-based investment firm RHJ international and late rumblings that GM might decide not to sell Opel after all were possibilities that caused concern for those with a stake in Opel's future. Opel employs 25,000 at four factories in Germany, and had the decision gone any other way, some of those plants were likely to be closed. One of the threatened plants is located in Eisenach.

"We see this as a way out," Harald Lieske, head of the workers council at the Eisenach factory, told Deutsche Welle. "The only decision that offered us a future was one with Magna, and for that we are very pleased."

A Magna deal may be the best case scenario for Germany, but that doesn't mean the tense waiting is over. Job cuts are still possible in Germany, and the final details of the deal are still up in the air. Dr. Stefan Bratzel, head of the Center of Automotive at the University of Applied Sciences in Bergisch Gladbach, warns against too much optimism.

"Over the past few months there had been talk of many 'breakthroughs' in negotiations," Bratzel told Deutsche Welle, "but until the last details of this deal have been finalized, I think we should be careful about calling this a 'breakthrough.'"

Best deal for GM and Opel?

Despite German optimism, the deal also begs the question of how good of a deal is this for General Motors from an objective point of view. Under the terms of the deal, Magna will own 55 percent of Opel, while GM will retain 35 percent. Opel workers will make up the final ten percent. This means that GM has effectively given up the majority share of its European market.

"I'm sceptical that this was really the best decision from the perspective of General Motors," said Bratzel. "The European market is very important when a company wants to remain a global player in the auto industry. When this market is given up, there is the risk that a company could become less competitive in the long run."

Bratzel adds that despite pressure from the German government to accept the Magna deal, GM may have simply gone with the deal that was the least problematic, if not the best deal imaginable.

"There is quite a lot of money at stake here," Bratzel said. "For GM to hold onto Opel, it probably would have cost several billion euros over the next three to five years. They apparently couldn't come up with that money, so they looked for an alternative. Whether or not a deal with Magna was the right decision remains to be seen."

It is clear that there is still a lot of work to be done to truly turn Opel in a new direction, but the deal with Magna offers, at the very least, a new starting point.

Author: Joerg Brunsmann / Matt Zuvela
Editor: Andreas Illmer