• Nov 3, 2009
After months of negotiations with supplier Magna and its Russian partner Sberbank, General Motors has decided not to sell its Opel unit. The General mentioned in the post-jump press release that the new board of directors came to the decision to keep Opel due to GM's recovering financial situation coupled with an improving business environment in Europe. GM's move to keep Opel comes just one week after EU's Directorate-General for Competition began investigating the sale to Magna to be sure it was based on sound financial footing and not because of political influence from Germany.

GM CEO Fritz Henderson added in the company's release that the process was difficult for all parties but in the end "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. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."

Now that GM plans to keep Opel in its brand portfolio, the next move is to proceed with a painful restructuring that could see the loss of 10,000 jobs and the elimination of 30% of the Euro unit's structural costs. The reported tally for the restructuring could cost GM upwards of $4.4 billion, and some of that could come courtesy of cash received as part of the company's $50 billion US government bailout.

Now that GM is out of bankruptcy, the company is reportedly no longer barred from using bailout funds for countries or regions outside of the US. It's also possible that GM could get loans from Germany and or Great Britain to finance the restructuring. The Detroit MI-based automaker also intends to work with European unions to develop a plan that contributes to Opel's restructuring. Hit the jump to pour over GM's press release.

[Source: Detroit News]

PRESS RELEASE:

DETROIT – Given an improving business environment for GM over the past few months, and the importance of Opel//Vauxhall to GM's global strategy, the GM Board of Directors has decided to retain Opel and will initiate a restructuring of its European operations in earnest.

"GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration," said Fritz Henderson, president and CEO. "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, employee, suppliers, and dealers, which is reflected in the decision reached today. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall's long-term future."

On a preliminary basis, the GM plan entails total restructuring expenses of about € 3 billion, significantly lower than all bids submitted as part of the investor solicitation. GM will work with all European labor unions to develop a plan for meaningful contributions to Opel's restructuring. While Opel continues to outperform against its viability plan assumptions and immediate liquidity is stable, time is of the essence.

"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 already significant business in Russia and to resume work directly with GAZ to contribute to both the modernization of its operations and the joint development of the Russian vehicle market on a mutually attractive basis. More details on the next steps in the restructuring will be provided as the plans and developments warrant
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  • 47 Comments
      • 5 Years Ago
      Yeeessssssss.

      The only thing I need to be 100% happy is Ford to call off Volvo sale.
      • 5 Years Ago
      Now if we can only convince Ford not to sell Volvo...
        • 5 Years Ago
        Well the guys who bought Aston Martin are in trouble now, maybe Ford could buy it back to make up for the loss of Volvo. Or they can just go back to the PAG since they're profitable now.

        PS. I know this will not happen :(
      • 5 Years Ago
      I always had a feeling that GM really never wanted, or had any intentions, of selling Opel. I further suspect their on-again, off-again decision making was just a ploy to garner some extra time to firm up their position to keep it, or to keep a major hand in it..

      In either case I wish them luck and prosperity for the brand.

        • 5 Years Ago
        that was obvious to everyone, even German politicians said that was GM's plan.
      • 5 Years Ago
      Good news!
        • 5 Years Ago
        The German government wants Opel to stay afloat as well because Opel provides jobs.
        • 5 Years Ago
        @ RMN

        > The German government wants Opel to stay afloat as well because Opel provides jobs.

        But not under GM ownership. Germans see GM as the root of Opel's problems and that Opel could be fixed only if GM's gone. GM doesn't understand this and is betting that Germans wouldn't actually bankrupt Opel.

        If bankruptcy is what it takes to remove GM from Opel's board, then so be it. Germans already recalled their 1.5 billion Euro loan.

        Now Opel bankruptcy is inevitable, unless the US government injects 4.5 billion Euros into Opel.
        • 5 Years Ago
        +1!!
      • 5 Years Ago
      Put OPEL on Brazil, India and China market and cut off that Daewoo thing, which is called Chevrolet in Europe and some parts of Asia.
        • 5 Years Ago
        @ angelov.todor

        > Put OPEL on Brazil, India and China market and cut off that Daewoo thing, which is called Chevrolet in Europe and some parts of Asia.

        Opel is not cost competitive like Daewoo is. Daewoo is more important to GM's survival than Opel is at this point.
      • 5 Years Ago
      Great news!
      GM needs Opel/Vauxhall for the entire global market.
      Now GM North American can import some Opel brands or better yet, build them here as Chevys/Buicks.
      Time to make great products again.

      Hopefully, they can pay their loans in full as well.
      • 5 Years Ago
      Good news, hope Ford looks at this and decides to keep Volvo. Selling Volvo to the Chinese would be a disaster.
      • 5 Years Ago
      Probably good news for the American taxpayer as well - better chance for successful disposal of its majority share if the company isn't so reliant upon the American market turnaround...
      • 5 Years Ago
      GM never wanted to part with Opel. It is their mainstay in EU. Loosing Opel would be akin to leaving the EU market which GM cannot afford. They were considering selling Opel only because of their dire financial situation. Hopefully, Opel sales were also up this month.

      • 5 Years Ago
      This is good news, hopefully for the domestic dealers, too. The Opel - sourced vehicles are probably as good as anything sold here today. I was recently in Canada, and rented the Astra 3dr. It even had a stick! Outstanding dynamics for a little car- to me, almost as solid as the benchmark Mazda3. Now if we could convince Ford to send us those little jewels that scoot around the Eye, I would think about SCCA again.
      • 5 Years Ago
      Wooohoooo............. now GM can spend that $6 Billion of OUR money, that they will need to spend, to shore up Opel.

      Fabulous.

      GM would be better off bankrupting Opel, so they can get out of Germany. This would cost them/us alot less money.
      • 5 Years Ago
      Given this "recovering financial situation" I wonder if GM might think about changing it's mind on the sale of Hummer and the closure of Saturn and Pontiac....

      Either way, I'm glad to see GM keep Opel and Vauxhall. Even if they had been operating below their potential it would have been a shame for GM to off-load them at a fire-sale price.
        • 5 Years Ago
        Also, same as with Opel/Vauxhall, I suspect that GM will not want to see Hummer come back as a competitor.

        GM has already done lots of work on the H4 (HX concept vehicle) which would a step in the right direction of making a CAFE friendly car, so who knows, maybe there'll be a similar "we've re-evaluated the situation" statement from GM re Hummer.
        Stranger thing have happened....
        • 5 Years Ago
        I didn't say they *should* keep them, I was just wondering if GM was having second thoughts...

        Each of those companies was once profitable and had good brand equity.

        Personally I think it's a damn shame to see Pontiac be closed, even if that's the price to be paid for making GM profitable again.
        • 5 Years Ago
        Why keep Pontiac, Hummer, Saturn, and Saab? So they can be the same spread-too-thin company as before?
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