GM cancels Opel sale

General Motors has decided to terminate the sale of its German car brand Opel to Austrian car parts supplier Magna Steyr (backed by a Russian bank) in signs that things are on the improve at GM.

The Detroit-based automaker issued a press release today detailing an "improving business environment" during the past couple of months, which led General Motor's Board of Directors to the decision to keep Opel.

There were already a few question marks around the Magna deal; in particular its ability to supply parts to other car makers that would ostensibly become it's rivals, had it absorbed the Opel car brand. This would have had the potential to create conflicts of interest.

"GM will soon present its restructuring plan to Germany and other governments and hopes for its favorable consideration," said Fritz Henderson, president and CEO of General Motors, the current owner of German car maker Opel.

"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," stated Henderson.

GM's new plan to keep Opel and restructure the business will cost around €3 billion, which is a value "significantly lower than all bids submitted as part of the investor solicitation" asserts General Motors in its media statement.

The American car maker says it will work with all European labour unions "to develop a plan for meaningful contributions to Opel's restructuring".

"While strained, the business environment in Europe has improved," GM boss Henderson continued. "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."

Magna Steyr's co-CEO, Siegfried Wolf, didn't appear upset at the change of heart from GM, at least publicly. "We understand that the Board concluded that it was in GM's best interests to retain Opel, which plays an important role within GM's global organisation," said Wolf.

"We will continue to support Opel and GM in the challenges ahead and wish to thank everyone who supported the Opel restructuring process for their tireless efforts and dedication over the past several months," stated Wolf.

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