The German Government has chosen Magna

General Motor's Euripean Arm has been saved from Insolvency procedures that is expected to hit the US group after an agreement has been announced at about 2am this morning. The Canadian Group, Magna International will be taking over the business with the backing of the German Government.

FIAT, the other group which was in the race to takeover the struggling group and acquiring an good brand at a discounted price, had withdrew from talks with the German Government, GM and US Treasury as it failed to provide guarantee on the number of Jobs that would have been saved and provide clear finance plans.

Under the signed agreement between GM and Magna, shares in the European arm of GM (GME) will be transferred away from GM so as to protect Opel from an imminent GM insolvency (which is expected to be announced on Monday). The German Government will also give GME €1.5bn in credit guarantees while final negotiation take place between GM and Magna. For the deal, Magna, together with Russian bank Sberbank, is offering €700m for 55 per cent of Opel and has agreed to come up with €300m of emergency funding that GM USA says it needs immediately.

The decision by the German Government to grant guarantees to the Magna was a happy ending for all German ministers. Karl-Theodor zu Guttenberg, German economics minister said that he was not all that happy with the agreement. He would have been happier to see GME become insolvent rather than grant so much money as guarantee to the future owner of the brand. However due to the upcoming elections the German government had to find a solution to this problem as soon as possible and this could have led it to take a less favourable option after all.

So we might consider this deal as another recession bargain...will there be any others as more companies seek to streamline their activities and divest businesses which are not coherent with their main area of business?

Renault the brand that is set to replace Volkswagen as the People's car

I was reading about the strategy followed by car companies and came across a very interesting strategic brand. It seems that as time goes by, more companies are aiming at improving their market positioning by moving from a hybrid strategy to a more differentiated one. The hybrid strategy, using Bowman's (1996) definition is a strategy that companies follow when they adopt a low to medium price with a medium to high perceived value. On the other hand the differentiated strategy aims at coupling the product offer differentiation with a price increase so as to take a more premium positioning.


Companies which are seen as moving along this strategic journey include brands such as Volkswagen, Fiat (especially with the launch of the new Fiat Cinquecento and the Chroma), Citroën and also Skoda. A brand which apparently has decided to keep it's mid market positioning, even though it heavily invests in adverting and brand promotion (by sponsoring sports such as Formula 1) is Renault. Renault's senior vice-president for global marketing, Stephen Norman, said that the brand will continue to focus on delivering ‘better value for drivers'. This strategy should enable Renault to make it through the expected deterioration market conditions for the year 2009.


The aim of Renualt are to improve sales and cash flows while continuing to work hard to achieve unparalleled quality level. In order to achieve the aim of enhancing it's cash flow renault is working on reducing it's inventory levels while at the same time is moving into e-commerce with Renaultshop. The advantage for customers is obvious: using a simplified search engine, customers can search for a vehicle by dealership, geographical area, model or budget. To support the brand improvement strategy and keep continue to transmit it's fresh and innovative image, Renault is launching a web-based TV channel: http://www.renault.tv/. Renault TV, will be an informative and entertaining medium that will be providing information about the brand, its products, and its motor sports to its viewers. It represents an alternative way of communicating to advertising with more comprehensive and various messages.


Will the commitment to it's mid market strategy coupled with innovative ways of communication succeed against the sub-premium move of its competitors? On time will be able to tell us who the winner will be...for now we can sit back and enjoy the innovations...