GM, citing improved financial health, decides to keep Opel

GM, citing improved financial health, decides to keep Opel


Jamie LaReau
Automotive News | November 3, 2009 – 5:21 pm EST

 

DETROIT — General Motors Co. has decided to keep Opel, undoing months of painstaking negotiations to sell the European unit to a Russian-backed group led by Magna International Inc. of Canada.

GM cited the improving business environment over the past few months and the importance of Opel and its British unit Vauxhall to its global strategy as reasons for the switch.

“GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration,” CEO Fritz Henderson said in a statement.

“This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall’s long-term future.”

GM’s preliminary plan lists total restructuring expense of about 3 billion euros, or about $4.43 billion. GM said it plans to work with all European labor unions to develop the plan.

GM says Opel is outperforming assumptions set in its viability plan and its immediate liquidity is stable.

“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.”

GM’s 13-member board made the decision today after meeting in Detroit.

A Magna spokeswoman declined comment.
 

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