4 Nov 2009

GM to retain Opel

5:13 pm on 4 November 2009

American car manufacturer General Motors says it is reversing its decision to sell its European division, Opel.

The BBC reports the announcement is a sudden and unexpected change of policy for GM, which had previously planned to sell Opel and Vauxhall to Canadian car parts firm Magna.

The US giant said in a statement that its board made the decision because of "an improving business environment for GM over the past few months".

It will now seek aid for Opel from the German government and other European states.

GM said it had also come to its decision because of the importance of Opel and Vauxhall to its global strategy, and would now initiate a restructuring of its European operations in earnest.

The decision is likely to cause much anger in Europe, where the planned sale of Opel has been dragging on for months.

German government spokesperson Ulrich Wilhelm says Berlin regrets the decision, and wants GM to repay 1.5 billion euros in bridge financing extended by German banks.