GM Throwing Opel Under The Bus?

General Motors - American's largest automaker - is desperate. It was just rescued from the brink of bankruptcy with a $13.4 billion bailout from the federal government and now says it needs another $16.6 billion to continue operations.

GM has been to leverage debt in the past few months to acquire capital, and now it is considering selling a 25%-50% stake in its European Opel brand. GM may even seek to sell-off Opel into an independent car makers.

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[Opel Flextreme concept car]

The measure is of course intended to provide GM with capital for its American operations, but by selling Opel GM may be seeking short-term gain only to spite its face in the long-run.

Opel is one of GM's oldest international brands, bought by the American company in 1929 when Opel was Germany's largest and most efficient automaker. It is also well-placed to provide GM with lots of cars sales from emerging markets in Asia, Latin America, and Africa where Opel is well established. Further, Opel's brand and manufacturing are closely-intertwined and GM cannot split up in a deal. Opel's manufacturing includes highly-efficient engines that GM intends to use in its American models to provide the more fuel-efficient cars that consumers increasingly want. But without Opel, GM will not have access to such capabilities.

So, the previously giant automaker is caught in a conundrum. That is why GM is desperately hoping the Germany government will come to the rescue of Opel, but that remains far from a certainty. And there is no way the American government - already reluctant to hand GM more money - will come to the rescue of a foreign subsidiary. If left with GM Opel will certainly cease to exist, but without Opel GM may find giving its line of cars a new kick even harder then present circumstances.