Commentary

No decision is, in fact, a decision. The future of the ailing car maker Opel is still up in the air, threatened by the ongoing German election and the outlook for new difficulties in the company's fortunes.

The German government and the governments of the German three states with Opel subsidiaries can clamor as much as they want: Opel's parent company, General Motors, continues to drag out the game. Having filed for bankruptcy as quickly as possible, the American car giant's Detroit managers are giving themselves time to decide the future of their European business -- and the fate of its German unit.

But pressure is building. Some 1.5 billion euros ($2.15 billion) of German tax money that went into saving Opel from bankruptcy will be used up by the end of this year. Worse, the government-sponsored "wrecking-premium," that allowed people to trade clunkers for cash towards a new car, will run out in a few weeks -- and that scheme had given a serious boost to Opel sales in Germany. That means even more difficult times are ahead for Opel, since despite the wrecking premium, Opel has continued to post losses in the millions.

Time for the next choice

Soon enough, the German government and the affected states will face a choice: let Opel declare bankruptcy, or give it another cash injection in the billions.

The American parent was reorganized under bankruptcy protection and with the aid of many billions of dollars from Washington. Once the largest company in the world, GM now belongs to the US taxpayer. And now, its managers in Detroit are in no hurry to make a decision. There are even some indications that they won't bother to sell their European activities at all -- but will instead try to use European taxpayer monies and do the reorganizing job themselves.

In any case, it certainly looks as if the Americans don't plan to sell GM's European car business to the preferred German suitor: a consortium made up of Canadian-Austrian car-parts maker Magna, Russia's Sberbank, and Russian automaker GAZ. Maintaining a minority stake in Opel would keep General Motors' hand in the European market. GM sees itself as an international car maker, and wants to maintain a presence in Europe. This is why the management in Detroit would prefer it if investment firm RHJ, which is taking a majority stake in Opel, would take over the company, reorganize it, and sell it back to GM.

Moreover, its worth bearing in mind that if Opel were to leave the GM group permanently, it would be bad news for GM: Opel is the company's center for development of small cars and engines -- in other words, the future of General Motors.

Competition from the Russians

General Motors is extremely critical of the Russian involvement in the Magna consortium. For the Russians, taking over Opel would be a milestone on the road to bringing the decaying Russian auto industry up to a European level. Meanwhile, General Motors itself wants to build and sell cars in Russia. It has no interest in giving the competition a boost in this important market.

GM is playing for time, and it is putting pressure on the German government and the states. At the same time, it is also an attempt to avoid turning this extremely unpopular issue into grist for the electoral mill in the coming parliamentary elections. In other words, it won't be until after the elections that GM will say what will become of Opel.

The Germans could be ramping up the pressure, of course. GM no longer holds the majority stake in Opel; it is held by five trustees, including two Americans and one German, as well as a chairman who won't take part in the conflict. All together that means that even if there was a blockade, there would be no decision. It would be a sure path to bankruptcy for Opel, and perhaps not the worst choice. In that case, the bankruptcy administrator would simply sell Opel to the highest bidder. And that is not necessarily US parent company GM.

Karl Zawadzky is the head of Deutsche Welle's economics bureau. (jen)
Editor: Trinity Hartman