GM cancels deal to sell Opel to Russian-backed group
In a shock move, General Motors has cancelled plans to sell its European car business, comprising the Opel and Vauxhall marques, to a Russian-backed consortium.
The Detroit company’s board said it had scrapped plans for the sale to Canadian car parts Magna and Russia’s Srbank, because of "an improving business environment for GM over the past few months."
The Magna deal had the backing of the German government, which had pledged €4.5 billion of loans. But the transaction, announced in September, has dragged on for months as other countries with Opel operations, such as the UK and Spain, tried to broker better terms.
GM says it now "initiate a restructuring of its European operations in earnest" and seek aid from the German government as well as other European states, adding that Opel and Vauxhall are an important part of its global strategy.
GM’s fortunes have radically changed since it gained $US25 billion in US government financial support and spent a brief period bankruptcy protection in June and July while it restructured.
A federal government “cash for clunkers” programme also boosted car sales. Also today, GM reported its first rise in monthly US car sales for almost two years.
Domestic sales rose 4.7% in October from a year earlier while sales at rival Ford were up 3%.
German media are already questioning how easy it will be for GM to simply cancel the sale agreement. This is because when GM went into administration, ownership of Opel and Vauxhall was transferred to a trust, headed by two representatives of GM, two from the German government and one independent panel member.
German newspapers have speculated whether it is this trust and not GM that will have to make the final decision.
Opel employs a total of 54,000 workers across Europe, with 25,000 based in Germany.
In the UK, Vauxhall employs 5500 people at two plants and others are in Belgium, Spain, Sweden (Saab) and Russia.