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GM-Peugeot Pact Heightens Pressure on Opel’s Limbo Plants

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Head of GAZ Group Siegfried Wolf
Head of Russian car company GAZ Group Siegfried Wolf gestures during an interview in London. Photographer: Simon Dawson/Bloomberg

March 2 (Bloomberg) -- General Motors Co.’s cost-cutting alliance with PSA Peugeot Citroen shows it made the wrong call in pulling out of a deal to sell European operations to Magna International Inc., the man who led the failed bid said today.

Since opting to keep the Opel division, GM has failed to grant the brand the liberty to innovate that automakers in costlier countries need to be successful, Siegfried Wolf, now the head of Russian car company GAZ Group, said in an interview.

“I think still that it wasn’t the right decision on GM’s part,” Wolf said today in London. “I’m convinced that if they’d sold it that would have been better for both.”

GM and Peugeot will build small and mid-size cars together under a deal announced Feb. 29, something which will heighten rivalries between plants, according to France’s FO Metaux union. At Opel, which has already cut almost 6,000 jobs, the deal casts doubts over the future of older sites in Germany and the U.K.

Wolf, appointed chairman of Russian Machines, which owns GAZ, in 2010, said that Opel and sister brand Vauxhall would have benefitted from more autonomy and an injection of “pride.”

“You see how they struggle, because they weren’t given their own identity,” he said. “The affiliates are still too dependent on the mother house. Being in high-cost countries they need to be given freedom to do more and show some ingenuity.”

The approach from Aurora, Ontario-based Magna, which was backed by Russia’s OAO Sberbank, failed after an agreement with GM was scrapped following the appointment of new board when the Detroit-based company entered bankruptcy protection.

Wolf still has links to GM, with GAZ -- controlled by Russian billionaire Oleg Deripaska -- agreeing last year to produce 30,000 Chevrolet Aveo sedans and hatchbacks annually for the U.S. company at its plant in Nizhny Novgorod.

GAZ also has accords with Volkswagen AG and Daimler AG.

To contact the reporter on this story: Steve Rothwell in London at srothwell@bloomberg.net

To contact the editor responsible for this story: Chad Thomas at cthomas16@bloomberg.net

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