Does the sudden change in General Motors´s strategy for its European subsidiary, Opel, tell us anything new about General Motors (GM) and the US economy?
GM had agreed to sell 55% of Opel to the Canadian parts manufacturer Magna and its Russian partners, who were to receive $6.7bn in aid from the German government for the takeover. Opel employs about 50,000 workers in Europe and thus the shape it would take in the future after GM´s crisis was very important to European governments, especially to Germany.
However, GM announced after its board meeting November 3 that it was dropping plans for the sale and would keep Opel “as a key part of its global strategy”. Germany was shocked, Spanish unions warned of resistance if the agreement with Magna is changed, and GM´s response was that all stakeholders would like its plan even better than Magna´s.
Why would GM make such a sharp turnaround? There is a possibility that it was, in a sense, calling Angela Merkel´s bluff. The German prime minister had assured the European Commission that the aid that Magna was to receive for its takeover of Opel would be available to any company that restructured the European manufacturer. GM may have decided that it would prefer to receive the aid itself, rather than see it given away.
Another possibility is that Opel´s new, small Corsa is truly a key piece in GM´s radical shift toward smaller, more fuel efficient cars. The Corsa is made mainly in Spain, and if it is that important to GM, this bodes well for the Zaragoza factory, which employs 7200 workers and was set to lose 900 under the agreement with Magna.
And finally, there is a chance that GM´s decision reflects a confidence in the future of the company, and of the US economy, that has not yet been confirmed by publicly available data. Are things going better for US automakers than it appears? Is the recovery of US auto sales, and of US consumption overall, more lasting than the artificial stimulus they were given by the “cash for clunkers” scheme? Should this turnaround give us new reasons for confidence?
Or is its simply that GM is making (another) strategic mistake?