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While beer or castles may be your first association with Germany, its auto industry should be a close second. We’ve been following the rhetoric and dealings surrounding the fate of GM’s Opel division in Germany [and Vauxhall in the UK] and today’s decision by GM to recommend Magna International as a buyer of Opel has important implications for German federal elections approaching on September 27th.

It was Chancellor Angela Merkel who originally supported Magna, a Canadian auto-parts maker with the backing of Moscow-based Sberbank, over Brussels-based RHJ when the government offered $2.2 Billion in loans to keep Opel afloat in May of this year. Merkel’s support of Magna, which some called “stubborn” support, hinged on the company’s ability to “save” or maintain the estimated 25,000 jobs Opel provides in Germany. This is an important electoral theme since the industry lies so close to the hearts of Germans and a will no doubt serve as a rallying point for Germans concern about the country’s employment picture.  

Weekly Forsa polls over the last months have teetered little, with Merkel’s Christian Democratic alliance (CDU-CSU) receiving the most favor, currently at 35% (down a percentage point from last week), a 14% spread over her rival Foreign Minister Frank-Walter Steinmeier of the Social Democrats. And despite a poor showing in the state of Thuringia in regional elections last week, in which the CDU conservatives lost absolute majority for the first time in 10 years, Merkel’s support looks intact and her political weight behind Magna appears well placed.

With Merkel’s preferred coalition partners the pro-business Free Democratic Party (FDP) maintaining its support at 14%, if elections were held today the coalition of Merkel’s CDU and the FDP would have a narrow parliamentary majority.

Certainly GM’s decision to support Magna as a buyer should boost Merkel’s credibility and provide a tailwind as elections approach towards the end of the month. Despite a 4% spike in support to the far-left Linke Party to 14% in the recent poll, the Left lacks a coalition partner should the center-left SPD pair with the Greens. With this set-up, Merkel’s conservative coalition looks to be in a favorable position as the election nears.

Matthew Hedrick

Analyst

Eye on Germany: Opel’s Role into Elections - GER12

Eye on Germany: Opel’s Role into Elections - GER34