Vauxhall talks stall over GM demands

Vital overnight talks between GM and the German government failed to reach any conclusion, after the US automaker demanded an emergency €300m loan from the German government.

The unexpected move meant that the future of the Detroit company's European businesses - Vauxhall in the UK and Opel in Germany - was still unclear.

Karl-Theodor zu Guttenberg, Germany's economy minister, said after the marathon negotiations came to an end “This was a bizarre night. The talks were turned upside down by GM’s unexpected demands. We do not have the assurances we need in order to extend a bridge loan."

GM is trying to offload its operations in Europe as part of an overall restructuring package designed to save it from bankruptcy before the US deadline of June 1.

It has been in negotiations with the German government over loans to help the purchase by preferred bidders Italian car giant Fiat and Magna International, the Canadian auto-parts maker.

The sale has serious job implications in the UK, with its two plants at Ellesmere Port on Merseyside and Luton at risk. However business secretary Lord Mandelson said yesterday that he is willing to look at requests for support from Vauxhall in the UK.

Magna chairman Frank Stronach said later that he might be willing to make the necessary €300m loan if the German government guaranteed the sum in case of bankruptcy. It is hoped that this makes a solution possible by the end of the week.

WHAT THEY ARE SAYING
Graham Ruddick, Daily Telegraph: "Vauxhall's future will not be decided this week, but the identification of a preferred bidder marks the beginning of a period of consolidation. Over the next few weeks and months, negotiations between bidders and governments, including the UK, will be what moulds the future share of Britain's most famous griffin."

Sarah Marsh and Noah Barkin, on Reuters: "Although GM will have the final word on who buys Opel, Berlin is playing a crucial role in the sale process because it is being asked to cough up billions of euros worth of loan guarantees as part of any deal. Opel traces its roots in Germany back to the 19th century and employs about 25,000 staff in four plants here. Its future has become the focus of a furious politically charged debate in Berlin ahead of a federal election in September."