GM slams Vauxhall/Opel deal into reverse

General Motors’ board of directors has done a massive u-turn and decided not to sell Vauxhall/Opel to Canadian car parts supplier Magna International. The move infuriated German politicians who had lent GM a 1.5billion euro bridging loan to support the sale of Opel and therefore save German jobs as it included a guarantee that no German factory would be closed.

GM will instead keep the Vauxhall/Opel brand and restructure it. Business Secretary Lord Mandelson is already planning talks with GM over the 600 voluntary redundancies at Vauxhall’s UK plants and how the deal reversal affects them and the 4,900 other UK workers producing models such as the Astra.

The change of heart is due to the massive costs associated with the sale being more than the restructuring charges and particularly due to European market conditions greatly improving over the last few months.

The fact that GM’s Chevrolet division rely on Opel platforms for the Malibu, Cruze and Cobalt models also played a part in the decision. Many analysts weren’t surprised by the news given that GM didn’t really want to sell the European marques but were rather forced into it because of economic conditions.

Although the German government aren’t too pleased, there is a glimmer of hope for the 10,500 employees made redundant by Magna’s takeover. But factory closures and job losses are still expected to be needed as part of the massive restructuring task that lies ahead for GM.

Vauxhall