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."

General Motors revealed it had clocked up nearly $US180 billion in debt as it filed for bankruptcy protection in the US with a government-backed plan to create a 21st-century company that can compete in world markets.

“GM’s and its stakeholders have achieved a viable, achievable plan that will give this iconic American company a chance to rise again,” US President Barack Obama said when announcing the move.

Canada’s Magna Intrnational, a car parts manufacturer, has emerged at the wheel of General Motors’ European divisions, which have been split off as the parent company nears bankruptcy.

Magna beat off a challenge from Italy’s Fiat, which withdrew from talks with the German government when the price got two high.

Germany is providing €1.5 billion in financing as part of a rescue proposal for the Opel division, which also includes the Vauxhall operation in the UK, and avoid bankruptcy. Opel employs 25,000 workers in Germany at four plants.