More On Motors

12th June 09 - More on motors

The motor trade might be micro in the scheme of things but it affects so many people’s life that there is no apology for recounting the latest events. The UK van-maker LDV (that was spun out of the old British Leyland) was reported in an earlier entry of this diary to have been saved by a Malaysian company. But, the potential buyer, Weststar, has been unable to secure financing for the deal. This Malaysian organisation has already used £1.4m to pay workers and preparing to resume manufacturing and the British Government provided a £5m bridging loan that may well now be recalled. The failure is apparently due to the pulling of three major Malaysian investors.

LDV hit a roadblock when its Russian oligarch owner Oleg Deripaska withdrew his funding support amid a stated financial self difficulty and the falling sales of vans. The funny thing is that this gentleman has reappeared as an industrial partner in Magna’s acquisition of the European arm of GM (see the diary entry for 8th June). As was surmised in the earlier entry, the most vulnerable part of the GM’s European arm namely Vauxhall, is the van plant in Luton. Siegfried Wolf, the chief executive of Magna told Bloomberg "At the end of the day, companies have to be profitable. Companies that are not profitable are not good for society." There may be a double irony here. First Magna itself is not exactly flush with profit and secondly, could we have one Russian effectively killing the two big UK-based van businesses?

Meantime, as part of the GM in Chapter 11 bankruptcy phase, the off-road Hummer brand is being sold to Sichuan Tengzhong Heavy Industrial Machinery as the first acquisition of a US car maker by a Chinese corporate entity (refer back to yesterday’s entry). The brands left in a "bad GM" are Pontiac, Saturn and Saab.

Oh what a tangled web we weave when the motor buyers they do leave.