"We must move on"

General Motors withdraws requests for financial assistance from the EU

General Motors (GM) is withdrawing its request for financial assistance from EU governments for its subsidiaries Opel and Vauxhall and will finance their upcoming restructuring of the enterprises independently, the automaker said in an official statement. The announcement follows the German government's refusal last week to provide the company with 1.8 billion euros in financial aid to restructure its European plants. According to GM’s statement, this decision was made possible due to the “recent strengthening of the corporation’s financial position” and due to the lack of time to continue negotiations on obtaining additional government guarantees. Thus, at the end of the first quarter, GM received its first net profit in almost three years in the amount of $865 million against a loss of $5.98 billion for the same period last year.

As you know, in May last year, the German authorities and General Motors announced a deal to sell the German concern Opel to a consortium of the Canadian Magna, Sberbank and GAZ Group. The formal signing of the contract was expected within five weeks, but it was constantly postponed. And on November 3, the GM board of directors decided not to sell Opel and keep the brand within the holding structure. The deal was actively supported by the governments of Germany and Russia. German Chancellor Angela Merkel then called GM's decision a "defeat" for her cabinet, and the head of the Russian government, Vladimir Putin, said that the situation around Opel is a "lesson for Russia," promising to take into account the American company's "disdainful" attitude towards its partners. Its direct participants Magna and Sberbank were extremely dissatisfied with the failure of the deal. Magna management announced its intention to receive the money spent from GM; according to some sources, the costs amounted to 100 million euros. And the head of Sberbank, German Gref, did not even rule out litigation with the American concern in court. True, at the end of April this year it became known that GM paid Sberbank compensation for refusing to sell Opel. “The bank's claims have been settled... GM has paid compensation in cash,” Reuters reported, citing a source close to the bank, who, however, did not disclose the amount. And the parties’ statement only said that Sberbank no longer has claims against GM, its demands for compensation “are resolved on mutually acceptable terms.”

Germany demanded that GM quickly present a restructuring plan for Opel. And Mrs. Merkel confirmed that “a decision on financial assistance will only be made if GM covers the lion’s share of the restructuring costs.” At the end of 2009, strikes took place at German Opel factories, and in February 2010, GM allocated $650 million to support Opel.

GM's statement yesterday emphasized that the British and Spanish governments were prepared to issue loan guarantees of €330 million respectively. And the governments of the German states where Opel factories are located, after refusing help from Berlin, also expressed their readiness to provide funds. But GM Europa chief and Opel chairman Nick Reilly said: "We have to go further." "The German government's decision last week was disappointing and means that the conclusion of these guarantees will again take a long time," he said.

Opel can now fully concentrate on implementing its development plan, which requires 11 billion euros. According to GM, Opel sales are growing faster than expected. Thus, over the past six months, 160 thousand orders have already been received for the new version of the Astra five-door, while the sales plan for the whole year did not exceed 180 thousand cars. And in just a few weeks, 30 thousand applications have already been received for the new Opel Meriva. The company also plans to launch seven more new products this year and five more next year, including a “revolutionary” version of the Opel/Vauxhall Ampera electric car.

Opel and Vauxhall employ about 48 thousand people in Europe, about half of them in Germany. Despite the refusal of government loan guarantees, the company does not plan any additional staff cuts or closures of Opel factories. According to the previously approved plan for its rehabilitation in Europe, 8.3 thousand will be cut.

Irina TSYRULEVA