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Oracle of Delphi

Opel deal is by no means done

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FRANKFURT, Germany -- If you thought the deal to sell a controlling interest in General Motors' European operations to a Russian-Canadian consortium was done, think again.

GM's fate could hinge on the outcome, because its European operations are responsible for developing the compact and midsize vehicles GM needs to survive. However, GM is making contingency plans in case things go sideways and it finds it cannot trust its partners in a shotgun wedding orchestrated by the German government after six months of tense negotiations and political intrigue.

It's almost impossible to get anyone to assess the deal's prospects frankly, because the people who know most about the plan are either personally invested in seeing it succeed or could lose their jobs if they expressed doubt publicly, but there may be more questions about Magna-Sberbank's deal to take control of Opel today than there were before a board created by the German government approved it -- by the narrowest margin possible -- 10 days ago. The tension has ratcheted up as governments across Europe asked the European Union to investigate whether the agreement violates the EU's core principles.

One frank assessment comes from GM CEO Fritz Henderson: "It's not done yet. I believe in never declaring victory too soon."

Some European executives have second thoughts on Russo-Canadian pairing

General Motors CEO Fritz Henderson wants the automaker's proposed alliance with Magna, Sberbank and Russian carmaker GAZ to succeed, but he's not betting the house on it.

Describing GM's sale of 55% of its European business to the Russo-Canadian alliance, he says that while Opel, which makes around 1.5 million cars a year, "couldn't exist" without General Motors, GM would only be "sub-optimal" without Opel.

Cut off from GM, Opel would be smaller than pre-crash Chrysler, unable to develop vehicles and technologies to compete with global powerhouses like Volkswagen, Toyota and Ford. Without Opel, GM loses the excellent engineers who developed key cars like the 2010 Buick LaCrosse, the award-winning Chevrolet Malibu and the upcoming 2011 Chevrolet Cruze.

Article Continues: Opel Deal is by no means done

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