Deal to buy Vauxhall could fall through

It seems that Magna's purchase of GM Europe wasn't as set in stone as the Canadian car component maker had claimed, as this morning (Monday 13th July) it has emerged that two other bidders are in the frame.

The two companies - China's Beijing Automotive Industry Holding Company (BAIC) and Belgium's RJH - have been asked along with Magna to outline their plans to Barack Obama's car task force before August. Last month Magna looked to have had the deal to buy Vauxhall and Opel tied up, with only the finer details of ownership and funding to be decided, but it's understood that talks have hit complications - paving the way for these two new bidders to improve their offers and muscle in on negotiations.

Insiders claim that Magna wants to use GM technology to build non-Opel/Vauxhall cars with Russian partner Gaz, which could lead to a situation in which GM is providing knowhow for products that are actually competing with it. With this complicating matters, as well as a separate dispute involving whether Magna should own a group of Chevrolet dealers in Russia, the pair of rival bidders has stepped in.

And because the American Government is now GM's controlling shareholder, President Obama has instructed his automotive task force to re-assess the situation and pick a preferred bidder. It is claimed that the Belgian bidder will give GM the option of buying back Vauxhall/Opel after three years, an attractive option should GM's European arm emerge profitable under new ownership. However, this new development will do nothing to allay fears that Vauxhall workers will ultimately be laid off, as no bidder has made a definitive statement regarding what it will do with the UK's two production plants.

Mark Nichol