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NINETY EIGHT REGENCY

Death of Opel deal helps VW-Magna relations, paper says

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Death of Opel deal helps VW-Magna relations, paper says

NOVEMBER 13, 2009 09:16 CET

FRANKFURT (Reuters) -- Volkswagen AG has dropped a threat to stop awarding contracts to Magna International Inc. after the Canadian auto supplier failed to buy rival carmaker Opel from U.S. parent General Motors.

"If Magna doesn't act like a competitor, we will continue to do business as usual," a spokesman told German newspaper Bild in an article published on Friday.

When Magna bid for Opel, top-level VW executives such as Chairman Ferdinand Piech voiced concerned that the auto supplier would become a competitor.

The mood at VW has changed since GM stepped away from the Magna deal and decided to keep its Opel unit.

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One of the many reasons I don't believe Magna ever was a serious contender for Opel. They stood to lose too much ancillary business as a parts supplier if they themselves got into the auto market. Would you want to hand specs for your new car design to a company that could be competing along side you?

I suspect the entire Magna-Sberbank (or whatever the hell the spelling is!) deal was just a smoke and mirrors dance as a favour to GM while they put their own ducks in a row.

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One of the many reasons I don't believe Magna ever was a serious contender for Opel. They stood to lose too much ancillary business as a parts supplier if they themselves got into the auto market. Would you want to hand specs for your new car design to a company that could be competing along side you?

I suspect the entire Magna-Sberbank (or whatever the hell the spelling is!) deal was just a smoke and mirrors dance as a favour to GM while they put their own ducks in a row.

See, that's why I think they wanted Opel. As a supplier, they knew what building cars entails. They've supplied so many different companies they could probably come up with their own designs based on what they knew worked and didn't from their customers. BUT--suppliers are always being squeezed on price. Supplying and building and then distributing their own cars would have given them one hell of a vertical monopoly, which could have cut costs, and they'd get to set their own prices at market. Could have been a very good thing for them.

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