Opel and Vauxhall fate in balance - BBC News

Opel and Vauxhall fate in balance

Opel and Vauxhall employ about 50,000 people in Europe

General Motors (GM) is due to make an announcement in Berlin later about what it wants to do with its European brands, Opel and Vauxhall.

There have been rival bids for the units from Belgian investment group RHJ and Canadian car parts maker Magna.

But sources close to the negotiations say "the noise within the system" is that GM will reject the offers and try to keep control of its European arm.

Any GM decision would have to be approved by the German-led Opel Trust.

The Opel Trust has been in control since GM sought bankruptcy protection in the US.

It contains representatives from GM, the German federal government and the German states that contain Opel plants.

Job news

Opel employs a total of 54,500 workers across Europe, with 25,000 based in Germany.

Its Vauxhall brand employs 5,500 people in the UK, primarily at its two British plants in Luton and Ellesmere Port.

Unions in the UK say that GM keeping control of Vauxhall would be the best news for British jobs.

The German government has said that GM would have to repay its 1.5bn euro ($2.2bn; £1.3bn) loan.

"The 1.5bn-euro bridging credit is a loan. And a loan is a loan. GM must pay back the 1.5bn under the conditions that we agreed on for Opel," German Finance Minister Peer Steinbrueck said on Wednesday.

Bankruptcy protection

He also said that there would be no more government help for GM if it closed German factories.

It is not clear where GM would get the money it would need to hang on to Opel.

GM emerged from 40 days of bankruptcy protection in July, based on a plan involving disposing of many of its brands. It is now 61% owned by the US government.

Last month, GM failed to choose between Magna and RHJ's initial bids, leading to speculation that the sale would not happen, for fear of technology and engineering resources ending up in a competitor's hands.

The German government prefers the Magna bid, based on the two companies' plans for job cuts at Opel following the takeover.

Both will see significant cutbacks in the workforce, but Magna is proposing fewer job cuts in Germany.

Nearly 25,000 people are employed at Opel's four plants in Germany, so the country has a strong interest in the outcome of the takeover, especially with a general election taking place in Germany later this month.

There is also understood to be pressure to find a solution in order to avoid distracting attention from model launches at next week's Frankfurt Motor Show.