WHAT MATTERS WEBLOG

General Motors decided to keep its German subsidiary Opel and not to sell it to the consortium of Canadian car parts supplier Magna and Russian bank Sberbank.

This decision won’t go down well with the German government which had been involved in negotiations for months to ensure the survival of the Opel brand despite the bankruptcy of General Motors. Opel’s employees won’t be particularly happy either since their opinion is that GM only is to be blamed for the current difficulties.  

Therefore a deal was cut with the Canadian car parts manufacturer which had agreed to run Opel together with its Russian partner Sberbank on the condition of multi-billion dollar grants by the German government.

Obviously, Opel is one of the more promising divisions of GM. Unlike Chevrolet or GMC, Opel’s cars are smaller and more fuel-efficient and therefore more viable in today’s car market.

Since Europe has had gas prices between $6 and $10 a gallon for many years now, demand for cars with a good mileage is higher than in the U.S. which prompted European car makers to develop more efficient and smaller cars.

Besides, Frank Weber, the engineer in charge of the development of the Chevrolet Volt electric car had been working at Opel before he was assigned his new task in the U.S. Now he returns to Germany to take a senior management role at Opel.

I think that for GM it was a good decision to keep Opel as it already has the car models that GM so badly needs to prop up sales. For the German government this setback is a lesson to refrain from any kind of interference in the market that hinders competition.

related articles from whatmattersweblog.com:

myVIEW: why bankruptcy is the best solution for GM’s problems

How to save the American auto industry? No time for baby steps!

the fundamental transition of the auto industry

things look pretty bad, don’t they? yet there’s reason to be optimistic

This entry was posted on Tuesday, November 3rd, 2009 at 7:39 PM and is filed under Electric Cars & Auto Industry. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.