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What’s going on at GM’s Opel (and how does it involve the Koreans)?

Opel is the German subsidiary of GM and responsible for engineering important components in the popular Chevy Volt and Cruze as well as some Buicks and Cadillacs.  Over the years, Opel has given GM critical design and technical expertise for small and medium sized cars.  Given that GM’s recovery has, like the U.S. economy, stalled, there is some talk that they may want to sell Opel to Volkswagen to help with corporate growth.

Okay, so how does this relate to Korea?  In two ways.  First, it is believed that increased capabilities at GM Korea (the old Daewoo Motors) have made Opel somewhat expendable and two, the German press is alive with speculation that Hyundai is competing with VW to buy Opel.  Germany’s premier automotive journal AUTO BILD says:

VW chief Martin Winterkorn “is scared of the Koreans as the biggest obstacle in Volkswagen’s way to #1,” writes AUTO BILD. Winterkorn himself had confirmed that the Koreans “are more brutal than the Japanese and attack everywhere in the world.”

More brutal than the Japanese?  Interesting.  Anyways, Opel does in fact have significant engineering talent, particularly in electric and hybrid technologies, things that Hyundai currently lacks.  Personally, I don’t think Hyundai is too interested in buying Opel because I don’t think they are too excited with inheriting Opel’s union woes.  I smell a ploy by VW to get GM to lower the price.

  • http://pawikoreapics.blogspot.com/ pawikirogii 石鵝

    ‘VW chief Martin Winterkorn “is scared of the Koreans as the biggest obstacle in Volkswagen’s way to #1,” writes AUTO BILD. Winterkorn himself had confirmed that the Koreans “are more brutal than the Japanese and attack everywhere in the world.”’

    this makes me proud because it ain’t everyday the germans are scared of somebody! i like the germans because they are some tough ass people. this is a badge of honor.

  • http://www.xanga.com/wangkon936 WangKon936

    Well, I’ll be impressed when Doosan figures out a way to copyreverse engineer the MTU Friedrichshafen GmbH’s 890 1,500 hp engine for the K-2 tank.

    They still can’t figure it out:

    http://www.defensenews.com/story.php?i=7120065&c=FEA&s=SPE

    They had better by October, otherwise the Korean military will just buy the German engine.

  • 조엘

    I could be wrong, but I think the entity GM Daewoo no longer exists. The new name is GM Korea.

  • http://www.xanga.com/wangkon936 WangKon936

    Joel,

    I know it’s been renamed to GM Korea, but I don’t know if the legal entity was completely changed.

    http://english.yonhapnews.co.kr/business/2011/01/20/33/0501000000AEN20110120004100320F.HTML

    But you are right, GM Korea is the correct name for the said unit. I will correct the post. I chose the term GM Daewoo because some people may be less familiar with GM Korea.

  • Wedge

    #2: ROKA equipment may be lousy and/or ill-maintained, but what allows me to sleep at night is the belief that it’s 10 times worse up north.

  • Awarren

    “Personally, I don’t think Hyundai is too interested in buying Opel because I don’t think they are too excited with inheriting Opel’s union woes. ”

    Here we go again – really WangKon! Would you please stop analyzing Korean companies as if they can merger, acquire, or cooperate effectively (the sole exception being the outdated JV model employed with the Japanese) with non-Korean companies on a whim. Opel’s woes are the least concern a Korean company would have when trying to acquire a foreign company the size of Opel. First, foremost and the game-killer would be “how the f*** would we manage it?”

    And concerning that “increased capabilities at GM Korea” example you pulled from Wikipedia. Do you know even one person who has ever worked at GM Korea?

  • 조엘

    I hate to be a downer, but Awarren is right. Hyundai wouldn’t know how to deal with Opel if they bought it and so they won’t. Samsung, a company I consider more international/global than Hyundai, still has no idea how to truly utilize the foreign talent it scouts from major business schools from overseas. So to think that Hyundai would know what to do with a foreign company where the union has the support of the government and where the employees won’t go all “Arirang Games” when the Chairman visits is too far fetched from reality.

    That aside it seems like an additional buyer for Opel would actually drive up the price of the asset. What’s the basis for your assuming that’s VW’s attempt to get it at a cheaper price?

    Awarren – I know people who work at GM Korea. Was there a follow up question?

  • Awarren

    Alright, from what you can glean about GM Korea from the people you know there, and the general status of foreign-owned manufacturing operations (what little there are) in Korea, what you do think about WangKon’s (Wikipedia-based) opinion that ” it is believed that increased capabilities at GM Korea (the old Daewoo Motors) have made Opel somewhat expendable”?

  • YangachiBastardo

    The Germans will allow Opel to be sucked in by Hyundai, when there’s a domestic solution available ?

    Let me break some other piece of news for you guys:

    The earth is flat

    The Eurozone is solvent

    The US balanced the budget

    Santa is coming to town

    you get the point

    The German Government never really digested the fact GM didn’t want to give out the company to Magna (which was a ridiculous solution) and blocked the Chrysler/Fiat takeover (and who can blame them for them, really), in their infinite ego they think the problem with Opel lies with the foreigners, the reality that Opel is another piece of eurotrash car manufacturer with truly olusy models doesn’t cross their mind.

  • 조엘

    Awarren – I actually spent a couple of years at the Gunsan plant from 2004 to 2006, but no facilities at that plant or the attitudes of the workers (who still resented GM for the takeover in 2001) at that time indicated that to me it was anywhere near ready to become an innovative, technology producing asset to the company. It was good at one thing and that was making economy model cars, giving them strange names and exporting them throughout Central Asia. Granted the Bupyeong plant was larger and slightly better equipped, but I never had any better impressions there either. But it was one of the only profitable divisions of GM at the time despite my impressions so what does that say about GM?

    Anyway my experience is dated, but I imagine that not too much has changed unless they imported additional foreign management to break down the hierarchy when they made the shift to GM Korea.

  • cmm

    Samsung, a company I consider more international/global than Hyundai, still has no idea how to truly utilize the foreign talent it scouts from major business schools from overseas.

    …or a lot of the foreign legal talent it scouts or a lot of the foreign engineering talent it scouts or a lot of…

  • Arghaeri

    Surely they ought to be experts in dealing with union woes by now?

  • http://www.xanga.com/wangkon936 WangKon936

    Awarren,

    A couple of things. First of all, the “analyzing” of a possible acquisition of Opel by Hyundai isn’t from me. It’s from the German press and management at VW. I’m just reporting on it.

    Also, I do appreciate the difficulties that Korean companies have in acquiring and managing foreign assets with different cultures and business models:

    http://www.rjkoehler.com/2009/10/16/doosans-bobcat-division-sucking-wind/

    http://www.rjkoehler.com/2007/07/31/doosan-infracore-to-buy-ingersoll-rand/#comment-99397

    Furthermore, I appreciate the difficulty in Korean companies absorbing foreign management:

    http://www.rjkoehler.com/2010/09/18/lg-group-ceo-canned-due-to-the-iphone/

    http://www.rjkoehler.com/2010/09/18/lg-group-ceo-canned-due-to-the-iphone/#comment-392144

  • http://www.xanga.com/wangkon936 WangKon936

    That aside it seems like an additional buyer for Opel would actually drive up the price of the asset. What’s the basis for your assuming that’s VW’s attempt to get it at a cheaper price?

    Joel,

    I actually believe that GM will never get an offer from Hyundai to buy Opel, so thus there will not be another bidder to raise Opel’s price. It’s very likely, from what I’ve read, that VW went to GM and made an offer and GM scoffed at it. I speculate that VM is playing the nationalistic card by saying that if they can’t buy Opel, then the Koreans will, to put more pressure on GM. Listen, I don’t pretend to know a lot about present day German politics or nationalism, but I do understand that many Germans want Opel back and returned to German ownership.

    I also speculate that VW is not going to offer more for Opel because it’s not worth that much to begin with. I believe it lost $1.6 billion last year. They are trying to shake Opel loose from GM’s grasp, hence the near hysterical rantings from VW’s chief. From my experience in M&A matters, when chief executives throw temper tantrums, it isn’t as random or impromptu as it may seem, but are rather strategic to illicit a desired result/response.

  • Maximus2008

    Wangkon,

    Those are really old news. Dan Akerson already came to the press weeks ago and said that that Opel talk was BS, and it was a comment made by VW chief that was taken “in the wrong way” by the press (like the press would make a mistake by accident…i.e., they wanted to promote the rumor).

    I know people from inside GM (and GM Korea). Opel/Vauxhall is the center of development of compact and midsize cars (Cruze, Malibu, Insignia, etc.), while GM Korea is the center for small and mini cars (Aveo, Spark). One complements the other in terms of passenger cars, so GM Korea, at this point in time, cannot simply take over whatever Opel does. In case this happens one day, it will be in a quite far future (min 7-10 years).

    And, today, GM Korea is very successful in exports to more than 150 countries, specially Eastern Europe, Africa, America (I mean the continent) and Asia.

    Hyundai buying Opel? What the others said: Hyundai would have no clue on how to operate/navigate.