Thursday, August 27, 2009

GM Worries About Russia Stealing Secrets

Now that things have gotten a little better for General Motors - the company is fresh out of bankruptcy and enjoying a boost in car sales - they are balking at a deal to sell off their European brand, Opel.

Back in May, GM struck a deal to sell their struggling European brand to a partnership between Canadian-based auto parts maker Magna and a Russian state-run bank, Sberbank. And therein lies the problem: Sberbank has close ties to the Russian government, so too does one of Russia's largest domestic automakers, GAZ. GM is worried that since Sberbank and GAZ are both close buddies with the folks in the Kremlin, the technology Opel uses to build their line of small and mid-sized cars could wind up in the hands of GAZ. Right now GM is the #2 brand in the Russian market, while Prime Minister Vladimir Putin has been busy this year launching a series of initiatives to prop up Russia's ailing domestic auto manufacturers, including one very unpopular move of slapping a 50% tariff on used cars imported from abroad (Russia's far east port city Vladivostok for one had a thriving cottage industry in importing and reselling used cars from Japan).

GM is now trying to pull out of the Magna/Sberbank deal in favor of an earlier bid from a Brussels-based company, or they may even try to keep Opel now that GM's fortunes are improving. Germany though, which has close economic ties with Russia, isn't so keen on letting GM back out of the deal, neither is Russia. And some analysts say that GM's industrial espionage fears are overblown. In 2006 GAZ bought the entire production line for the Sebring sedan from Chrysler and shipped it to their plant in Nizhny Novgorod - immediately this second-hand production line became the most modern domestic auto plant in Russia. So even if GAZ were to get its hands on Opel's technology, the analysts say, it's unlikely they could quickly bring their existing production lines up to speed, the technology gap that exists at the moment is just too great. Not to mention a modern, automated line could put tens of thousands of Russian auto workers out of their jobs, something Russia would like to avoid in the current economic crisis.
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