GM Europe deal trips up on design rights

INTELLECTUAL property rights are shaping up as the deal breaker for bidders chasing General Motors Europe’s Opel and Vauxhall in the GM bankruptcy fire sale.

One of the three official bidders, Beijing Automotive Industry Corp (BAIC), has fallen out of the running, blaming failure to reach agreement on intellectual property rights – the ability to freely use GM Europe’s licensed designs and technology in vehicles produced by the new owners.

Talks with one of the remaining bidders, Magna International, have also struggled over design licence royalties, with the German chancellor Angela Merkel – who favours Magna – weighing in on the subject after talks last week failed to reach resolution.

Magna and its rival bidder, Belgian private equity firm RHJ, have both offered to include GM in the new company’s future, with Magna offering a 35 per cent slice to the American company.

Left: Hyundai Elantra Yuet China.

RHJ chief executive Leonhard Fischer was quoted in a German newspaper as saying any new-look Opel would need a GM connection.

“Let’s be pragmatic – it won’t work without General Motors,” Mr Fischer told the newspaper, which said the RHJ boss refused to rule out selling GM Europe back to GM once it had been restructured and downsized.

On Friday, BAIC released a statement saying it had failed to reach an agreement with GM on the sale of Opel due to the intellectual property issues.

“In the negotiations over intellectual property, we have been in constant communications with General Motors,” BAIC said. “Regrettably, both parties failed to reach agreement on the issue.”

The Chinese company had wanted to take the Opel brand global – a situation that would not have thrilled GM.

For example, that could have meant a GM Europe-designed and engineered Opel Astra going head to head with the new Chevrolet Cruze – built on the same Delta II platform – in several markets.

GM also would have been reluctant to strengthen a Chinese rival to its own Chinese partner, Shanghai Automotive Industries Corp (SAIC).

Worse, BAIC is partnered with Hyundai – one of the fastest-growing automotive groups in the world.

BAIC’s version of the Hyundai Elantra was the second-best selling model in China in the first half of this year, trailing GM’s Excelle by just 1160 units. This time last year, the Elantra was the 10th best-selling car in China.

In Europe, the trust that took control of Opel in the wake of the GM collapse has said that it will only take a decision on the buy-out “when the necessary pre-conditions have been met and we have received a firm proposal to base out decision on”.

It did not say in the statement what the pre-conditions were.

The trust said it would vote “in favour of the proposal that offers the best commercial concept for the future of Opel”.

The five-person trust includes two GM representatives, two German government members and an independent chairman, American Chamber of Commerce president in Germany, Fred Irwin.