Automotive News Europe - March 2, 2009 - 4

PAGE 4 · www.autonewseurope.com March 2 , 2009 Opel ‘weeks away’ from collapse GM Europe’s largest carmaker faces uncertain future unless it gets billions in state aid John Revill Automotive News Europe Opel urgently needs money to prevent a cash crisis that could result in the total failure of its operations. The time frame is weeks. The cash-starved General Motors brand has appealed to governments in European nations where it has operations to supply emergency funding to bridge a ¤3.3 billion liquidity shortage. “The situation is very serious, Opel needs funding in a matter of weeks,” a source familiar with the matter told Automotive News Europe. GM wants Opel parent GM Europe to make savings of $1.2 billion (about ¤942 million) this year in addition to the $750 million in savings it is currently carrying out. GM said February 16 that it could take “unconventional and aggressive steps” to cut costs in Europe and is considering “several” plant closures or spinoffs. But this will not be enough to save GM Europe, which made a pretax loss of $1.6 billion in 2008. “If money does not materialize, the company is facing the prospect of insolvency,” the source said. Securing financial aid could depend on Opel being established as a separate European legal entity outside of GM, a so-called Societas Europaea (SE). This pan-European business structure would reassure European governments that their aid would not be spent outside Europe. “The Opel SE option is being seriously discussed,” people familiar with the matter told the German media. Another source told ANE that GM Countdown to crisis Five troubled months for GM Europe October 2: GM Europe President CarlPeter Forster calls for government help to fight what he says is the worst market downturn since 1993. The situation is grim, he says. November 7: GM Europe reports a $974 million (€762 million) thirdquarter adjusted pretax loss. “This was a brutal quarter,” Forster says. November 17: Forster asks German Chancellor Angela Merkel for state loan guarantees. GM Europe also approaches the governments in Spain, UK, Poland and Belgium for funding support. January 9: GM Europe reports annual sales down 6.5% to 2.04 million cars in Europe. Opel/Vauxhall sales drop 10.5% to 1.6 million. A German Opel worker adds the words “better without GM” to President Obama’s famous campaign slogan. was, indeed, preparing to restructure Opel and other European businesses. The moves would include GM Europe’s Vauxhall operations in the UK. The unions also want Opel to become independent of GM. GM Europe’s union leader, Klaus Franz, who represents 55,000 employees in Europe, said: “There is no future with GM. We can only see any prospects with a divestment.” Most analysts agree that Opel needs to find a partner to develop new models and must also close plants. Max Warburton, an analyst at Bernstein Research, argues that Daimler is the most logical partner. The Stuttgart-based carmaker has ruled out a takeover of Opel. Stefan Bratzel, head of the Center of Automotive institute in Bergisch Gladbach, believes an industrial partner from Asia could work because it would be interested in Opel’s technology, its brand and its distribution network. But analyst Dudenhöffer thinks an independent Opel could survive on its own by making its own alliances. This would reduce the cost of developing and producing platforms, without the complexity of being involved in a large company like GM. January 19: GM Europe and its union agree on a plan to reduce working hours at factories across Europe. February 10: GM announces plans to cut 10,000 white-collar jobs globally, including 3,000 to 4,000 in Europe. February 16: Union leaders warn that Opel and Vauxhall will collapse in 2 years if they stay part of GM. February 17: GM says it plans to cut 47,000 jobs this year, 26,000 outside the US. GM says it is considering “several” plant closures and spinoffs in Europe to save $1.2 billion (about €942 million) in 2009. February 26: GM Europe reports adjusted pretax loss of $1.6 billion (€1.3 billion) for 2008. Photo: Reuters Unions want out of GM GM is also prepared to sell a stake in Opel to a third party to lower its exposure to further losses in Europe. Ferdinand Dudenhöffer, from the University of Duisburg in Germany, anticipates Opel will make heavy losses for at least the next two years. “The best plan for GM and Opel would be to make a separate company and call it Opel SE,” he said. Urgent help is needed, Dudenhöffer said, because he expects Opel to lose ¤4.5 billion in 2009 and 2010. Analyst: Opel can survive alone “The idea that a company that makes 1.6 million cars is not sustainable is nonsense,” Dudenhöffer said. GM, meanwhile, says it is keeping its options open. Chris Preuss, head of communications for GM Europe, said: “We remain open to any plans of partnerships, equity stakes or alignments that can make Opel and GenerANE al Motors Europe stronger.” Saab’s path to survival will be perilous Swedish automaker’s future is no longer in its own hands as it awaits investment John Revill Automotive News Europe The odds are against the survival of Saab as an independent automaker, as it begins the process of spinning off from its troubled US owner General Motors. The Swedish company began its journey to independence when it entered reorganization, a self-managed Swedish court process, on February 20. Saab boss Jan Ake Jonsson admitted then the “road ahead will not be easy,” but said he is confident about the future. “Saab has a trademark which is well-established both in Sweden and internationally. We have a documented, efficient production [process] and we have a strong range of models in development,” Jonsson said in a statement. Jonsson said there has been interest in Saab from a number of potential investors, both those inside and outside the auto industry. Saab’s business plans have been revised substantially in recent weeks. Jonsson foresees very low production levels in the near term. “We revised down our estimated production volume by 10 percent to 15 percent, depending on what year What’s been said about Saab “We need to know there is a secure ownership so that [Saab] can show a profit in 2012, 2013.” Maud Olofsson, Swedish industry minister “Today is the beginning of a new chapter in Saab’s history.” Jan Ake Jonsson, Saab managing director, (February 20, 2009) “Somebody needs to come in and take over the business in the near term.” Rick Wagoner, GM CEO “With 3 strong automobile models just around the corner, it would be a waste not to try to find a long-term way forward.” Guy Lofalk, Saab administrator you are talking about,” Jonsson told reporters in Sweden. Saab’s business plan calls for the company to sell 65,000 to 70,000 cars this year, down from 94,000 in 2008, but eventually rising to 150,000 units in three to four years. The Swedish Reorganization Act says an application will not be approved unless there is reasonable cause to assume the purpose of the reorganization will be achieved. But industry experts are gloomy about the prospects for Saab, which sold about 135,000 vehicles globally at its 2006 peak. Peter Cooke, professor of automotive management at Buckingham University in England, said the company is too small to survive on its own. “They have a nice dealership network, but their products are expensive and very old. I am not very optimistic about the future for Saab,” Cooke said. Saab estimates that it made a loss of about 3 billion kronor ($340 million) last year and would suffer a similar loss this year. Its survival depends on the Swedish government offering loan guarantees, with the Despite the automaker’s difficulties, Saab’s 9-3X will debut in Geneva. company seeking a total of $1 billion. GM has offered $400 million plus plant and machinery for the new models but said Saab needs outside money as well. “We have asked the Swedish government for loan guarantees for $600 million to give Saab a balance sheet as an independent unit, which will allow it to continue” said Chris Preuss, GM Europe head of communications. Preuss said funding for Saab is still intact. “We just need to see how funding can be secured from either government or private sources during the restructuring process,” Preuss said. But Sweden is not prepared to consider loan guarantees to Saab, unless the carmaker finds a private investor to un- derwrite its business plan, Industry Minister Maud Olofsson said. “Let us hope those who have contacted [Saab] are the kind of interested parties who are prepared to step in,” she said. Mike Tyndall, head of automotive research at Nomura Bank in London, said that what happened to the UK’s last domestic volume manufacturer, MG Rover, could also happen to Saab. MG Rover’s management bought the carmaker from BMW in 2000. But they failed to find a buyer or a permanent strategic partner and the company collapsed five years later. “Someone needs to broker an agreement where Saab gets to a position where it is sellable,” Tyndall said. “Getting someone in to help is going to be a big challenge in the ANE current situation.”
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Automotive News Europe - March 2, 2009

Table of Contents for the Digital Edition of Automotive News Europe - March 2, 2009

Automotive News Europe - March 2, 2009 - 1
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