GM Wants Opel Expertise After Sale to Magna

As General Motors Corp. Works through the sale of Adam Opel GmbH to Magna International Inc., the auto maker confirms the German subsidiary will remain one of its global engineering centers.

“We anticipate that (Opel) will continue to play a major role into the future,” says Ray Young, GM's chief financial officer, in a conference call with journalists and Wall Street analysts.

For years, Opel provided GM with small-car expertise, a responsibility that has shifted predominately to South Korea's GM Daewoo Auto & Technology Co.

But Opel has remained a hotspot for the development of smaller-displacement engines, which GM plans to feature in more of its vehicles as it works to meet ever-stricter U.S. fuel-economy rules. And Germany now plays a key role in the development of GM's midsize-car architecture.

Opel also has worked extensively on GM's alternative-propulsion programs.

“Clearly, (Opel) has a lot of capabilities,” Young says. “They're a center of expertise for many platforms. They are a center of expertise for 4-cyl. powertrains. We'll continue to leverage that to our benefit. Under the new General Motors, there is no room for waste. (We) need to leverage the strength of all the partners.”

But Young says the final agreement between GM, Magna and Opel will contain safeguards ensuring that all the parties continue to perform to a certain level.

Young also says the bankrupt auto maker and Magna, a global parts supplier based in Aurora, ON, Canada, will determine the composition of the Opel management team. “Magna and (GM) will decide how that will be structured.”

Before filing for bankruptcy June 1, GM consolidated its European operations, including Vauxhall, under Opel. The Magna agreement was reached just before the filing.

The deal calls for Magna to take 20% of Russelsheim-based Opel. Russian lender OAO Sberbank will receive a 35% stake as part of a plan to expand the Opel brand into that market, Magna says. Opel employees gain a 10% share and GM retains 35%.

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