Maybe Stronach's next bet should be closer to home.

Day 583

There now are two party crashers to what Magna hoped was a soon-to-be-done deal to acquire Opel-Vauxhall from bankrupt GM.

Beijing Automotive Industry Holding is reported to be putting the finishing touches on a proposal to GM. Earlier this week, Belgian private-equity house RHJ International submitted a renewed bid, after GM and Germany rejected its first proposal, along with  Fiat's, in favour of a Magna-led consortium.

All this is tentative, of course. GM and Berlin, in giving Magna the nod, are actually hoping to flush out more bidders and prod existing ones to upgrade their bids. While Magna partner Sherbank, the big Russian lender, came out yesterday asserting its certain claim on Opel, Frank Stronach has kept his Champagne corked.

And just as well, since this is all about politics. And the winds of political, labour and popular sentiment in Europe, where Opel operates six factories, are shifting even more rapidly than is usually the case in such nuanced dealmaking.

Meanwhile, Lear Corp., the big U.S. auto seatmaker, is about to file for Chapter 11. The more we think of it, Lear, the 11th-largest global auto-parts firm (Magna ranks third), would be a better fit for Stronach than Opel-Vauxhall. And that losing the latter deal wouldn't be such a bad thing, if it freed Magna to buy Lear out of bankruptcy at a sweetheart price.

We don't dislike the Opel deal. It lessens Magna's reliance on Detroit, for one thing.

But it is a complex proposition. It's a joint venture, and those are seldom a breeze to manage. Opel-Vauxhall is a second-tier firm, yet its operations sprawl across a continent, with factories in no fewer than five countries. The aggravation-to-reward ratio is high.

And while hardly a tenderfoot in complete-auto assembly, Opel-Vauxhall is an obvious stretch for Magna. Stronach has just one plant, in Austria, where Magna makes other folks' vehicles under contract. With Opel-Vauxhall, Magna would be designing its own new vehicles, having to account for the varying tastes of Spaniards, Germans, Brits, French, Poles, Russians...Magna will have to hand-hold a network of dealers. It will be attempting to turn around an ailing complete-vehicle-assembly enterprise. And deal with European unions that call a lot more shots than North American ones do. Much of this is virgin territory for Stronach.  

Lear is so much more straightforward. It has been a sick puppy for at least a decade. One of the firms that has outclassed it, of course, is Magna. The Aurora, Ont.-based Magna is a longtime innovator in auto-seating design and defect-free manufacture. Buying and fixing Lear would be a whole lot easier than steering a turnaround at Opel-Vauxhall, with powerful unions second-guessing almost every decision, and Berlin and the Kremlin-controlled Sherbank looking over your shoulder.

Did we mention Ford is our one bet on Detroit?

Yes, and probably too often - sorry about that. But here we go again. In the U.S. sales numbers for June, released yesterday, Ford continued to take market share away from GM and Chrysler. This is exactly what Ford must do, exploit to the max GM and Chrysler's weakness while those two bankruptcy victims struggle to get their act together. 

We do think that's going to take a long time. In fact, we think the Chrysler-Fiat alliance will go south. GM, by contrast, is just too big - even in its shrunken form - to discount entirely. Eventually it will start putting up a fight. It might take a couple of years, though, for GM to shed its arrogant culture sufficiently to start acting like the troubled enterprise it is. That is, to ruthlessly streamline operations, accelerate new-product development, and wrap itself in the flag and start marketing itself as "America's car company."

So far, GM shows no signs of doing the latter, and is moving on the first two items too slowly, knowing it has Uncle Sam (and Ottawa and Queen's Park) as a backstop. For all that Obama has being saying lately that there'll be no more money for GM, as GM's majority shareholder Obama will be, if not an easy touch, very receptive to future mini-bailouts to protect his initial one.

And that gives Ford more time than any genuinely competitive market - one with an abundance of healthy players - would offer. We expect Ford CEO Alan Mulally knows that, and will keep pushing his advantage.

For the purposes of this blog, the inception of the Great Recession in the U.S., the epicentre of the crisis, is taken as the start date for the global slump. The U.S. has been in recession since December 2007.