As the race for Opel enters a critical phase in which the German government chooses a preferred bidder, analysts are concluding that the political backdrop in Germany and the need for concessions on capacity reductions threatens to undermine the benefits that a Fiat-Opel merger could bring.
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Sabine Blümel, analyst with Creative Global Investments (LLC), told just-auto today that the pressures for concessions on jobs and plant closures in Germany would devalue what she believes is a ‘compelling case’ for a merger between the two groups.
Blümel draws attention to structural overcapacity in Europe and the opportunity that the overlap on product offerings between the two groups creates.
“In view of the great overlap between the two in terms of product offering and structural overcapacity, only drastic actions would generate benefits from an alliance between Fiat and GM Europe,” she says.
“This is an opportunity to cut overall structural overcapacity in Europe, estimated at almost 6m units. Unfortunately, the role of government in deciding the fate of Opel means that the overcapacity issue is less likely to be faced up to decisively,” Blümel maintains.
And she also warns that the public funds directed at the new Opel organisation will amount to a distortion of competition.
“Any subsidies for Opel must surely put the firm’s main competitors at a disadvantage and will likely lead to further demands elsewhere for still greater support from Europe’s taxpayers.”
Dave Leggett
