Opel Won't Work Under Magna, Analysts Think

It was only a matter of time until General Motors finally confirmed the sale of its German brand Opel to Canadian - Austrian partsmaker Magna International. But even if Magna and its Russian partner Sberbank is going to take control of the majority stake in Opel, automotive analysts do not think the German brand is going to follow a successful patch under Canadian/Russian ownership.

Mostly because Magna, who's currently supplying parts to top players in the auto sector, might lead to a number of contracts being ended for Opel.

“The most meaningful choice would have been a global company that produces several millions of cars (per year), such as GM or a Chinese producer,” Frank Schwope, from Germany's Nord LB Norddeutsche Landesbank, said according to Reuters. “Magna is not a producer of cars in the classic sense, and I could imagine that some other producers could be upset about the decision. As a consequence, Opel may lose some contracts."

Some analysts think that selling Opel to Magna is more a political decision, as German officials pressured General Motors to pick the Canadian - Russian alliance for owning Opel.

“This doesn't really change the dynamics of the European marketplace that much. Opel is still there with the same facilities, and for a long time it will have the same products although longer-term it will change as they grow in Russia," Credit Suisse's Stuart Pearson was quoted as saying by the source.

“In the long term, I'm not sure what Magna brings in terms of car manufacturing expertise -- it doesn't basically. It's a long road back to profitability and it's going to take a lot of cash and a lot of time.”