The Situation At Opel

The pace of news has been positively breathtaking surrounding all that is going on with General Motors. As I've said before, the corporation is so vast, with so much going on that it's just incredible. The entire company appears to be heading for bankruptcy, and a much smaller global reach when the dust finally settles.

The auto industry as a whole and General Motors are in total upheaval right now. It's quite interesting to watch the back and forth, with the sheer amount of players involved. Spanning the continents with leaders of various companies, corporations and wat not.

When things finally settle down, the automotive landscape will be forever changed. GM will no longer have subsidiaries Opel/Vauxhall, Saab, Hummer or Saturn. The individual units that once were total components of GM are now organizing themselves into factions and they're all fighting for survival and a peice of the (draining) supply of cash held by GM Headquarters.

Some of the details surrounding the situation are very odd. Opel is a wholly owned GM subsidiary but it "sold" GM all of it's patents back in 2005? Now those patents are held by the U.S government, Opel wants them back and if it can't get them, it wants hundreds of millions in retribution. The U.S government, as de facto owner is the primary decision maker in what goes on with these corporations. It now has a vested interest in what goes on due to the large amount of bailout money given.  Given GM's reach, now other countries are talking with the U.S Treasury to try and sort things out. What a total mess!

There was a report recently that stated Opel would have enough liquidity to stand on it's own and the ability to operate as a seperate unit during a GM bankruptcy. Fritz Henderson has even said so himself that liquidity pressures on GM Europe have "eased" and that the main problems would hit in the second quarter of the year when the company was (hopefully) rid of it's entaglements.

They message was that for now, they are sustaining themselves. I wonder if that was just public posturing. First of all, while the unit might be sustaining itself right now, I doubt it's viability to be a standalone for good. Remember those "pressures" that GM expects to hit in the second quarter? GM wants to avoid that any injections of liquidity whatsover, even to the point of giving a majority stake away. In exchange, GM would retain a minority stake and would be relieved of all it's responsiblities surrounding the brand.

GM is being broken off into bits and pieces, and in that respect I think the company's strength will be weakened significantly. It will lose a significant part of it's European reach, strengthening it's competition through acquistions and will lose developmental abilities. What a shame.

If you're trying to make sense of it all, you're not alone. The details really aren't clear and there is a lot of conflicting information flying around out there.  To try and sum it up, unless something dramatically changes GM is likely headed for bankruptcy and is not keen on sustaining it's money-losing overseas operations. The corporation is trying to find buyers as quickly as possible. No matter what, GM CEO Fritz Henderson says we'll hear something regarding the brand in the next few weeks. Hang tight, more of this never ending wild ride is ahead!