Deep Dive: General Motors considers selling Opel to Chinese

General Motors is said to have Washington's approval to divest from Opel, it's loss making European satellite, and has been in high-level talks with the Chinese government since early May. The timing and conditions of such a deal remain unclear, but it is far enough along to alarm the German government, which has asked Volkswagen Group to take over Opel and stave off Chinese involvement. In 2009, GM very nearly sold Opel to a consortium led by Magna and Russia's Sberbank. But at the eleventh hour, the company changed its mind and backed out of the deal. When this decision was announced, the German chancellor Angela Merkel was in mid-air on her return flight from Washington, where she had celebrated the twentieth anniversary of the fall of the Berlin wall -- and lobbied on Opel matters. The decision by the Obama administration meant a political defeat for the snubbed German leader, who was on the brink of signing off various life-saving measures for the ailing German brand. With Chapter Eleven looming, GM dethroned Opel head Carl-Peter Forster and installed Nick Reilly as new integrator maximus. Despite a wave of fresh products and massive incentives, the brand is still bleeding cash. In the third quarter of 2011, Ruesselsheim lost almost $400 million. In the very same quarter, the mother from Michigan earned $3.2 billion. Even though the US administration has step by step reduced its interest in GM to one third, red ink is the last thing Dan Akerson and his team need to steer the car maker toward full independence and greater profitability. In an interview with Germany's Cicero magazine (May issue), the former "car czar" Steven Rattner said: "Last year, Opel lost 1.8 billion Euro. Dan Akerson is not going to tolerate this much longer....Opel needs to watch out." Since he failed to engineer the turnaround in time, Nick Reilly was sidelined, and Opel veteran Karl-Friedrich Stracke was appointed as new chairman of the board. Although this move was supported by various restructuring and streamlining initiatives, insiders are convinced that the powers in Detroit still want to sever their ties with Opel as badly as theydid back in 2009. We contacted the Opel press department and tried to get a hold of Nick Reilly, but the only official response was a lukewarm "No Comment."