We're guessing that by "certain governments," General Motors actually means Germany. The country just voted against handing out any money to either Opel or Vauxhall because General Motors seems to be doing well enough to support its children. Whether true or not, GM says it will continue to pursue other financing options to help support the two European brands.
GM originally asked European governments for a total of $2.2 billion at current conversion rates, and to date, only the UK and Spain have responded around $405 million in aid each. Hop the jump for the full press release.
[Source: General Motors]
Funding Requirements to be met internally
Rüsselsheim / Detroit. General Motors and Opel/Vauxhall have decided to withdraw all applications for government loan guarantees across Europe.
There have been no material alterations in the funding requirements of Opel/Vauxhall as set out in the Viability Plan announced seven months ago. The validity and reasons for requesting government guarantees have also not changed, but the process has proven to be much more complex and longer than anticipated and the results are still not finalized or certain. In these circumstances, and given the need to progress the plan quickly, it has been decided to fund the requirements internally. GM's recently improved financial strength has also been a catalyst for making this decision.
"We appreciate the support indicated by certain governments, especially the UK and Spain, but we need to move on," said Nick Reilly, President of GM Europe and Chairman of the Management Board of Opel/Vauxhall. "The decision of the German government last week was disappointing and means that the conclusion of these guarantees is again likely to be months away. To be clear, our funding needs have not changed and we were led to believe that loan guarantees made available to other European companies under the EU program to help offset the impact of the global economic crisis, would be equally available to Opel/Vauxhall. But, after a very long process defined by governments, this has turned out not to be the case," he said. "We are grateful for the decision and support of our parent company, which will allow us to move forward with confidence in this very competitive industry. We cannot afford to have uncertain funding plans and new time-consuming complex negotiations at this time when we need to keep investing in new products and technologies. With these new products and the impact of restructuring, we expect to return to profitability shortly," Reilly added.
As part of a European-wide request, the UK government had committed guarantees for €330 million of bank loans and a similar amount had been indicated from Spain. The total amount requested from all European governments had been in the order of €1.8 billion. The German federal states have expressed a willingness last week to enter into new negotiations. Two weeks ago, Opel/Vauxhall had signed agreements with its European employee representatives for restructuring the company, labor cost savings and for commitments to product investments. These agreements are not tied to government guarantees.
Following this announcement, Opel/Vauxhall will be able to fully concentrate on the implementation of its growth plan, in particular the €11 billion investment plan into future products that was announced in February. Opel/Vauxhall products continue to be highly successful in the marketplace, with sales volume consistently beating internal expectations. The new Astra 5-Door version which was introduced at the end of last year, already registered more than 160,000 orders within 6 months – just 20,000 orders shy of the full-year target of 180,000. For the new Meriva, Opel/Vauxhall received 30,000 orders within just a few weeks. The company continues to be on track for the launch of seven new products this year and another five next year, including the revolutionary new Opel/Vauxhall Ampera.