GM has announced that it is to hold onto European car divisions Opel and Vauxhall for the foreseeable future.
The decision has been met with welcome response from UK union leaders, who feared job losses.
‘This is an incredible turnaround from General Motors,’ Tony Woodley, the joint general secretary for Unite said in a statement. ‘I am absolutely delighted with this news. It is fantastic news for the UK and right that General Motors does not break up its family and instead retains ownership of Vauxhall.’
Woodley noted that GM supports more than 20,000 jobs and 400 component companies in the UK.
GM had previously announced that it was planning to sell European operations to Canadian car-parts maker, Magna, and Sberbank, Russia’s biggest bank. The German government had shepherded a plan where Magna and Sberbank were reportedly prepared to put up €500m (£450m) for equal stakes of 27.5 per cent in Opel, the German division of GM.
Russia’s second-largest carmaker, OAO GAZ Group, which works on joint projects with GM, was an industrial partner to the bid.
GM announced in a statement that it reversed its decision because of the ‘improving business environment’ for GM over the past few months.
‘GM will soon present its restructuring plan to Germany and other governments and hopes for its favourable consideration,’ stated Fritz Henderson, president and chief executive of GM.
On a preliminary basis, the GM plan entails total restructuring expenses of about €3bn (£2.7bn), which the carmaker points out is lower than all bids submitted as part of the investor solicitation.
‘While strained, the business environment in Europe has improved,’ Henderson said. ‘At the same time, 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. We are grateful for the hard work of the German and other EU governments in navigating this difficult economic period. We’re also appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement.’
Henderson added that GM also hopes to build on its business in Russia.
Siegfried Wolf, Magna’s co-chief executive officer said through a company statement: ‘We understand that the board concluded that it was in GM’s best interests to retain Opel, which plays an important role within GM’s global organisation. We will continue to support Opel and GM in the challenges ahead and wish to thank everyone who supported the Opel restructuring process for their tireless efforts and dedication over the past several months. In particular, we wish to thank our partner, Sberbank, for its significant contribution and support throughout this process.’