Max Auto Updates - 11/09/2009

GM to sell Opel & Vauxhall to Magna



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GM has announced that they will support a sale of Opel and Vauxhall to a group of investors fronted by auto parts manufacturer Magna International. The final decision to sell rests in the hands of the Opel Trust, which is comprised of five board members.

Two of those members were picked by the German government, which has openly supported the Magna bid, and will provide billions of euros in bridge loans to keep the operation running as smoothly as possible. Two other board members were picked by GM, and were previously believed to support Belgian investment firm RHJ International's bid.

According to a press release issued by General Motors, the American automaker will retain 35% of the two brands, while the brands' employees will keep 10%. That leaves a majority stake of 55% for Magna, which is also being supported financially in the agreement by Sberbank.

Labor unions involved will need to sign off on the deal, which they are largely expected to do. Magna and Sberbank were supported by labor, the German government, and several regional German governments because of their vision for the brands, and willingness to keep on as many employees as possible. RHJ International was largely perceived to be in the running to turn a quick profit.

One GM concern over a sale to Magna is the issue of technology sharing and parts purchasing. Chief amongst the concerns is the Russian market, where Russian manufacturer OAO GAZ has expressed interest in producing 180,000 vehicles for Opel in their home country. Opel and Vauxhall will be bringing to market the Ampera, their rebadged versions of GM's heaviest recent investment, the mostly-electric Chevy Volt, and GM is keen to protect their investment. To this, GM says in the release, "Participating in GM’s global technology development and purchasing organizations secures important economies of scale for Opel/Vauxhall and other GM brands. For example, vehicles that represent new propulsion technologies, such as the Ampera extended-range electric vehicle, can only be brought to market in a joint effort."

“GM operates many joint ventures around the world and has proven in the past that this business model delivers the right balance of independence, innovation and synergies,” said Opel Trust board member and GM executive John Smith. “All parties will work hard to close the deal as soon as possible."

It is a change in tune for Smith, who had previously called the RHJ deal a "simpler proposal" compared to the rival bid from Magna.

Opel and Vauxhall employ 50,000 across Europe, over half of which are based in Germany. The deal with Magna will likely boost popularity of German Chancellor Angela Merkel, who was criticized for her refusal to support any Opel proposal other than that from Magna. Merkel is up for re-election later this month.

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Volvo issues recall



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Volvo Cars said on Wednesday it would recall 26 000 cars worldwide due to faulty software that causes engine problems.

"It's the electronic module which under certain circumstances does not work as it should," a spokesperson said.

The result is that the vehicle might have problems starting.

According to Volvo South Africa the only models which are affected locally are the 3.0T derivatives of the S80 and XC70 sold in 2008 and 2009.

Volvo informed that the faulty software won’t affect the car's safety and that the upgrade to fix the problem takes 18 minutes.

Owners of affected vehicles will be contacted.