Vauxhall and Opel withdraw loan bids after delays
- 16 June 2010
- From the section Business
Vauxhall and Opel, the European operations of General Motors, have withdrawn applications for government help, citing long delays.
They said the 1.8bn euros ($2.2bn; £1.5bn) of aid was still needed, but said the process had been "much more complex and longer than anticipated".
Germany has rejected a request for state aid and the new UK government had put loan guarantees under review.
The companies said they would now have to fund their growth plans internally.
"GM's recently improved financial strength has been a catalyst for making this decision," the carmaker said in a statement, adding that it expected to return to profitability "shortly".
Earlier this month, Germany rejected a request for about 1bn euros of loan guarantees.
GM Europe president Nick Reilly said that decision had been "disappointing" and meant the matter may have dragged on for many months.
"We cannot afford to have uncertain funding plans and new time-consuming complex negotiations at this time when we need to keep investing in new products and technologies," said Nick Reilly.
The previous UK government had - in March, shortly before the general election - agreed guarantees for £270m of loans.
But the new coalition government put this decision under review as part of efforts to cut spending, leading to uncertainty for workers at its Luton and Ellesmere Port plants.
However, shortly after the GM announcement was made, Business Secretary Vince Cable confirmed to the House of Commons that the UK would go ahead with its pledge to guarantee loans.
"We understand that GM is considering its next steps in the light of progress in obtaining funding from Germany," he said.
"I believe it may not wish to proceed with our offer, but the offer has been made."
While a GM Europe spokesperson confirmed that the company would not be taking up the offer of a loan, its UK subsidiary Vauxhall said that despite this there would be no job losses at Ellesmere Port.