General Motors set to keep European business

General Motors set to keep European business

Car giant General Motors is set to retain ownership of its European business, sources said today.

An announcement is expected to made in Berlin later today, ending months of speculation about the future of the business.

The US firm had been considering selling its European Opel and Vauxhall brands in the face of the slump which has hit carmakers across the world.

GM’s board has held a two-day meeting in Detroit and is believed to have signalled a decision not to go ahead with a sale.

Unions had feared heavy job losses among the 5,500 workers at Vauxhall’s factories in Luton and Ellesmere Port in the UK if the business had been sold to Canadian company Magna, backed by Russia’s Sberbank.

A competing bid was made by RHJ International, a Brussels-based investment house.

A decision not to sell the European business could spell bad news for the car firm’s operation in Germany.

GM made no comment on the speculation today.

British Business Secretary Peter Mandelson has been urging the GM board to take an "objective, commercial decision" about the future of its European operating divisions.

He said last month that the crucial decision needed to secure the long-term viability of both Opel and Vauxhall in the UK and should not be “distorted” by political considerations in any one country.

The German government has been backing the joint bid from Magna and Russian bank Sberbank, offering around €5bn of finance.

Berlin championed the Magna bid because it involved guarantees not to shut down German plants, which employ 25,000 workers, but UK ministers have been pressing for a “commercial” decision to be made rather than one influenced by politics.

GM was considering the sale under moves to return to a firmer financial footing after emerging from US bankruptcy.

German chancellor Angela Merkel’s government is believed to have been pressing for a deal to be finalised before the September 27 general elections.

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