Since the implosion of the “Big Three” here in the Unites States, the global auto industry has been carjacked and forced into the chop shop.
General Motors cut off brands like frostbitten limbs: Pontiac, Saab and Hummer are on the global market. GM’s Saturn is expected to be sold to Penske Automotive Group (PAG:NYSE) on Oct. 1, 2009, reports Bloomberg.
“General Motors Co., seeking to eliminate half its brands after emerging from bankruptcy, plans to announce the sale of its Saturn unit to Penske Automotive Group Inc. on Oct. 1, people familiar with the talks said.”
The sale has been planned since July.
GM, of course, wasn’t the only carmaker in the hot seat, either. Chrysler also declared bankruptcy this spring.
Since then, Chrysler hasn’t found a solution to its image problems, despite being bought by Italy’s Fiat (F:Milan). In fact, there could be more pain ahead.
CNNMoney’s Peter Valdes-Dapena writes, “The carmaker may have been given a sleek and shiny new balance sheet, but the products on the showroom floor are the same stale cars and trucks from before and there's not much new to look forward to. In the hyper-competitive American car market, that empty product pipeline is potentially disastrous.”
The auto industry’s issues aren’t contained in U.S. companies. There have been complications around the world. Ones that spark controversy and ones that spark opportunity.
Take GM’s impending sale of Opel, its European arm. This sale has been fraught with difficulties from the start, and the latest bit of news on the deal is no exception, as The Wall Street Journal reports:
More uncertainty was injected into the planned sale of General Motors Co.’s Opel to a group led by Magna International Inc. as Spain urged European regulators to investigate the agreement and Germany’s Free Democrats, consistent critics of the deal, were poised to win a powerful voice in Germany's new government.
The deal has run into steady fire from Magna customers and European governments alike since the Canadian auto-parts maker reached a preliminary agreement to buy a majority stake in Opel earlier this month.
GM has had a bit more success in China, though. It was just granted conditional approval for the purchase of a portion of Delphi Corp. (DPHI.PK). These two companies have a long history together, and this move makes things just a bit more complex.
Delphi used to be GM’s parts supplier division. Ten percent of GM’s parts come from this company, according to Forbes.
Forbes reports, “GM is purchasing Delphi's global steering business and four of the parts supplier's plants it used to own in New York and Indiana.”
Another bright spot is the Volkswagen (VOW:XETRA) takeover of Porsche (PAH3:XETRA). These two companies are essentially owned by the same family, and this family has been fighting. Talk of a deal has been in the news off and on for years…
But now, it looks like a deal is a lock.
And in response, Qatar said it might increase its stake in Volkswagen after the takeover.
Bloomberg’s Robert Tuttle writes, “The Persian Gulf state already has 10 percent voting rights in Porsche, the maker of the 911 sports car, and options that will give Qatar a 17 percent stake in Wolfsburg, Germany-based Volkswagen as part of an agreement last month for the two German manufacturers to combine.”
The deal between VW and Porsche is worth about 3.3 billion euros (US$4.8 billion), a fairly big consolidation that certainly looks like an opportunity for Qatar.
The auto industry is barely on its feet, which will create many more opportunities down the road. With M&A heating up, keep an eye on the chop shop…
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