General Motors and Magna International aren’t exactly on the best terms now that the Detroit automaker has changed its mind about selling its German unit, Opel, to the Canadian supplier. But that’s not stopping GM from seeking a new, much smaller deal that would see it tying up with Magna and GAZ to produce cars in Russia.
“I see us being able to pick up with Magna and GAZ and continue to try to develop this business – but obviously now as part of a GM-retained Opel, not as part of a Magna-Sberbank consortium,” GM Group Vice President John Smith, who served as a chief negotiator in the failed Opel deal, told the media.
An unnamed source told the Detroit News that GM had already contacted Sberbank, the Russian bank that had been tapped to provide key financing for Magna’s planned acquisition of Opel.
It’s not the first time that GM, GAZ and Magna have discussed a three-way production deal; the Detroit automaker was deep into negotiations with GAZ owner Oleg Deripaska three years ago when the Russian ran into financial hurdles that prevented the project from taking flight. GAZ, an historic industrial force in Russia, is best known for producing military vehicles and some consumer vehicles under the Volga name. Its freshest product is the Volga Siber, which is essentially a rebadged previous-generation Chrysler Sebring sedan.
GM isn’t exactly revered in Russia or Europe after its abrupt decision last week, which could lead to troubles for the plan from the get-go.
Russian Prime Minister Vladimir Putin, not one traditionally shy about speaking his opinion, said, “GM didn’t discuss anything with anyone.”
“It doesn’t hurt our interests, but it speaks of a peculiar culture of communication of American business with its business partners,” Putin said. “This arrogant attitude is directed first and foremost at the Europeans rather than at us.”
11/09, 9:14 AM
posted by:
armstealer
I’m sure the parts Magna supplies GM will be designed and built with the utmost care and consideration from now on…
Note to self: stay away!
11/09, 9:42 AM
posted by:
Need more oil for GM
Magna would be smart to take the deal. It is beeter to be on the side of General motors and the one that will be in its wake. The American Revolution is kicking a$$ and taking names!
Be American. buy American. It is unpatriotic to buy Toyota or any other import
11/09, 9:46 AM
posted by:
ajm11
@ Armstealer – Frank Stronach knows better than to start doing that. He may not be happy about being shut out of the Opel deal, but business is business. Any one in any industry can tell you that. You don’t start burning bridges just because you didn’t get what you want. I am pretty sure that Magna still receives a lot of revenue from GM. If they start producing sub quality parts for GM that revenue will go away.
11/09, 9:53 AM
posted by:
Borat
@Jake66, as I noted before, Kremlin isn’t pleased with break up of a deal. I think, it was not GM decision, since GM (like any whore) gladly jump into sack with anyone. Putin missed the point, that GM is government run entity just like Volga (was!) and corporate decisions are made in our Kremlin, ughm, White House. Heck, GM would sell everything to Iran and Korea and not even for the right amount of money.
11/09, 10:23 AM
posted by:
ajm11
Borat – Did Jake66 comment on this? If he did, what happened to his post.
11/09, 10:51 AM
posted by:
Borat
Nope, we “conversed” on the post of why the deal fell through. My statement was that Deripaska (owner of VAZ and Sperbank and the majority owner of takeover alliance) is either gangster from within or outside Kremlin walls (Mr. Putin statement places him into inside the walls).
11/09, 10:53 AM
posted by:
johnnycanuck
ajm, did you read the article in the Globe & Mail on Frank Stronach last week. It pretty much echoes your evaluation… sometimes these things work and sometimes they don’t. There’s no reason to take it personally.
The article also went on to say that Opel’s unions are severely pissed over GM’s decision. Then again this is GM we’re talking about, so somebody must have their panties in a bunch.
11/09, 11:17 AM
posted by:
carstuff
Decision was made by GM board, not white house. Unless of course you have some kind of proof?
11/09, 12:20 PM
posted by:
JakeK66
@ Borat – I still agree what GM did though, I think they had to stop the sale, and how they did it is fine with me…
On the other governments and unions getting mad – look – GM is GM. It’s a company looking out for their best interest – not a country looking out for it’s people. Somehow some of these Europeans have it in their heads that a company reports to everyone who works for them – and that’s their culture. GM, though, is looking for what’s best for the company to survive – keeping Opel is one thing they felt would keep GM around. The Germans were just looking out for their best interest and that was Magna asuring them of little job losses in their country – now GM has a less interest in just Germany, so they will have job losses more evenly and that means less German jobs.
On Russian industry concearns – look, GM is giving you a consolation prize – take it if you want it, or don’t.