US giant cancels sale to Magna because European arm is too important

Vauxhall is not for sale so says General Motors which has cancelled any plans to sell a stake in its European car business Opel, including its UK brand Vauxhall.

The US giant claimed "an improving business environment for GM over the past few months" was the reason for its decision not to sell to Canadian car parts firm Magna. It also stated that both Vauxhall and Opel were important to its global strategy.

The move was broadly welcomed by business secretary Lord Mandelson, although he said he was "keen for very early discussions" to discover how it would affect British plants and workers at Ellesmere Port which makes the new Astra and the Luton van plant.

GM now has to ask for more state aid from European governments to keep Vauxhall and Opel afloat, a task that's looking increasingly difficult as an angry German government has asked GM to repay 1.5bn euros in bridging loans from its banks following the failed sale.

However, the non-sale has not come as a surprise to many industry analysts, who said that it was only being forced upon GM because of its financial situation in the US. Indeed, Magna co-chief executive officer Siegfried Wolf said: "We understand... it was in GM's best interests to retain Opel. We will continue to support Opel and GM in the challenges ahead," he added.

Source: Autoexpress