On Monday, General Motors made corporate history by becoming the biggest industrial organisation to ever file for Chapter 11 bankruptcy in the US. June 1 was the deadline set by the US government to present a viable restructuring plan in return for state aid.

It will now inject £18.5 billion, following the original £12 billion funding package. In return it gets a 60% stake in GM, which will be radically restructured and downsized. 

Part of the restructuring is the sale of its European division. In the UK, fears are growing over job losses at Vauxhall’s two plants, Luton and Ellesmere Port, which employ 5,500 people, following news that the German government has named Magna as its preferred bidder for GM Europe.

Germany is playing such a big role in deciding GME’s future because it is providing £1.3 billion of bridge financing while discussions take place. It is desperate to secure jobs at the four Opel plants in the country.

The German government has also pledged to give GME
£4 billion of credit guarantees once the sale is completed.
Magna, a Canadian parts manufacturer, is being backed in part by the Russian Gaz group, which is owned by Oleg Deripaska.

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Gaz is the owner of British-based van manufacturer LDV, which is currently being sold to the Malaysian Weststar group after it was forced to the brink of administration.It’s not an ideal track record for a prospective backer of GME. The industry will be watching progress with interest.

Fleets are also watching with interest but, as yet, none have actually changed their purchasing choices away from the UK’s biggest fleet supplier. Some, including cosmetics giant Avon, have said they will wait for the outcome before making a decision, though.

Those cars will continue to carry the Vauxhall badge – a rebrand to Opel is unlikely. Vauxhall accounts for almost a third of GME’s car sales and half of its European van volumes.

The cost of removing the brand and the ensuing consumer confusion would not be offset by the advantages of having one name across Europe, according to company insiders.

The existing GM UK set up for fleet sales is also likely to remain, at least for the time being. The company has invested too much in setting up a combined sales force and dealership network for Vauxhall, Chevrolet and Saab to pull back quickly. 

GM UK will effectively act as an importer for Chevrolet and Saab, with the relationship gradually fragmenting over time.

Do you feel encouraged by the takeover of GM Europe by Magna International and backed in part by current LDV owner Gaz Group?

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