Vauxhalls, Magna and 4.5B Euro loan

[s2art]

So, the German government is making a loan of 4.5 billion Euros at 10%.
How are Magna going to make a profit with that?
Looks a lot like an asset stripping affair to me.

[Busa_Rush]

Magna bought a loss making division of GM . . . when the world is in a recession and the brands they bought are at the lower to bottom end of the scale . . . even without paying 10% on debt they would struggle to make a profit.

I think they will cherry pick the assets they want, then dump the rest. Anybody hear Rover echoing in the background . . . ?

[JMGS4]

IIRR the german government has only bought a stake in Opel, Vauxhaul stays part of GM, AFAIK... the belgies are revolting because their Opel plant will get the chop and they are the ones protesting to Brussels to get the loan stopped....

[FNG]

This is an industry where 5% profit is considered to be outstandingly good, and less than 1% is the norm. Huge turnover is the only reason that the profits look respectable. And that's with a market rate for cost of capital.

10% means they're going to run a massive loss, be forced to reduce investment, and the product will suffer.

Cue a never-ending downward spiral of product quality, market share, future investment and customer loyalty.

So, same as MG Rover then, but with more $$$ involved.