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GM Retaining Opel

Published 11/04/09 Dustin Ensinger - Print Article
E-mail - editor@economyincisis.org

In a stunning reversal, General Motors' board voted on Tuesday to retain its European Opel unit after planning its sale for months, and even going as far as to secure financing from the German government.

GM officials cited the improving economy and Opel compact car technology as the reason the company decided to keep the European unit.

"While strained, the business environment in Europe has improved," Fritz Henderson, president and chief executive of GM, said in a statement. "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."

As part of its restructuring plan, GM for months has planned on selling a 55 percent stake of its European unit to Canadian parts maker Magna International Inc., which has a partnership with a Russian bank.

"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, employees, suppliers and dealers, which is reflected in the decision reached today,” Henderson said in the statement.

The decision comes on the heels of the first year-over-year sales increase for GM in 21 months.

The news was not received well in Germany, where officials had provided the company with billions in bridge loans to ensure that the sale of Opel was completed, believing that that was the best chance to save tens of thousands of German jobs.

"We are grateful for the hard work of the German and other EU governments in navigating this difficult economic period," Henderson said in a statement. "We're also appreciative of the effort put forward by Magna and its partners in Russia in trying to reach an equitable agreement."

Rainer Brüderle, a German official, called the move “totally unacceptable” and vowed to recoup the taxpayer money loaned to GM in order to close the deal.

Henderson, however, appears to be looking for some sympathy from the German government. "GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration," he said in a statement.

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