Sunday, May 31, 2009

Mr. Stronach’s Opel

“We want to build Opel cars in Canada,”-- Magna chairman Frank Stronach

Canadians will soon be full fledged shareholders in the new General Motors (right after that nasty little bankruptcy business is taken care of) and of course we are all helping Chrysler to overcome it’s current financial travails, but while we contemplate what it may be like to be the owner (small share as it is) of a couple of car makers, there’s even more interesting news on the way for Canada’s automotive sector.

Frank Stronach, the owner of Magna parts, has been the successful bidder for the GM spin off company Opel Motors, the European office of the one time GM empire. Stronach realized a long cherished dream over the weekend, when he came out ahead of Fiat, which had also been in the hunt to buy the Opel brand and now perhaps will concentrate their interest on securing Chrysler.

For Stronach, the successful bid seems to have provided the realization of a long held wish to be more firmly in charge of a sector of the automobile manufacturing industry and securing a home for many of the parts that his company makes.

It also has allowed him to trumpet the potential of bringing to Canada it’s very own automobile manufacturing company, with his apparent long term plan to begin to build Opel vehicles in Canada for the North American marketplace.

It makes for an interesting dynamic, while two of the major North American manufacturers are busy securing loans, selling off their dealerships and seeking public ownership, the Canadian entrepreneur is trying to reclaim some of that same industry for Canada.

Stronach’s company will be a twenty per cent shareholder in the Opel brand, sharing the burden of ownership with Sberbank of Russia 35%, General Motors (the new one we assume) 35% and the employees of Opel who will have a ten percent share in the new venture.

Should he prove to be persuasive to his partners and move some of the manufacturing to Canada, it would be the first time since 1918 that a Canadian based auto maker Sam McLaughlin put a car into production and onto the roads, McLaughlin's company was eventually merged into General Motors, bringing an end to any development of a truly Canadian designed vehicle.

What remains to be seen if the Opel manufacturing comes to Canada, is if that brand will resonate with Canadians. Or considering that we now have such a huge investment into GM and Chrysler, if Canadians will end up buying cars more for a return on their investment than for personal preference.

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