General Motors has decided to retain its European car business Opel/Vauxhall and cancelled plans to sell a majority stake to Magna.
By Ian Armitage
A GM statement said its board had made the decision because of “an improving business environment for GM over the past few months”.
As reported on Manufacturing Digital, GM had agreed to sell Opel and Vauxhall to Canadian car parts firm Magna.
The car giant said it is now seeking aid for Opel from the German government and other European states, adding that it had come to its decision because of the “importance” of Opel and Vauxhall to its global strategy.
“GM will soon present its restructuring plan to Germany and other governments and hopes for its favourable consideration,” said Fritz Henderson, President and CEO. “We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long term solution for our customers, employee, suppliers, and dealers, which is reflected in the decision reached today. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”
The “GM plan” entails total restructuring expenses of about 3 billion euros, lower than all bids submitted as part of the investor solicitation.
GM will work with all European labour unions to develop a plan for meaningful contributions to Opel's restructuring.
“While Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence,” GM said.
POSITIVE SIGNS
Henderson explained that while the business environment in Europe was “strained” it had improved and is confident the European operations have a part to play in the firm’s future.
“GM’s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured,” he said.
He added that GM is “grateful for the hard work of the German and other EU governments in navigating this difficult economic period” and that it is “appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement.”
The decision is likely to cause much anger in Europe, where the planned sale of Opel has been dragging on for months and the German government had pledged Magna 4.5 billion euros in loans.
More details will follow soon.
SOURCE: www.gm.com
Edited by Ellie Duncan
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