General Motors Cancels Plan to Sell Majority Stake in Opel and Vauxhall

Strategic Insights -

General Motors' decision to cancel its plan to sell a majority stake in its German unit Adam Opel GmbH to Canadian car-parts maker Magna International and its Russian partner, Sberbank, marks a shift in the company's business environment. The US automaker cited an improving business environment and its overall financial health as the reasons for the decision. This move comes after GM posted a 4-per cent gain in US auto sales, its first year-over-year increase in 21 months.

Key Takeaways:

  • General Motors canceled its plan to sell a majority stake in Opel and Vauxhall due to an improving business environment and increased financial health.
  • The US automaker cited a 4-per cent gain in US auto sales, its first year-over-year increase in 21 months, as a reason for the decision.
  • GM will initiate a restructuring of its European operations with a new $4.5 billion plan.
  • The company employs a total of 54,000 workers across Europe, with 25,000 based in Germany and 5,500 in the UK.
  • Opel's sale to Magna was earlier in the day announced as a 55-per cent stake swap deal that also included Opel's UK sister company Vauxhall.
  • The German government had provided Magna with 4.5 billion euros ($6.7 billion) in loans to save the ailing auto unit.

Statistics:

  • 54,000: Total number of workers employed by Opel across Europe.
  • 25,000: Number of workers based in Germany.
  • 5,500: Number of workers employed by Vauxhall in the UK.
  • 4-per cent: Gain in US auto sales for General Motors.
  • 21 months: Timeframe since General Motors last posted a year-over-year increase in US sales.
  • 4.5 billion euros: Loans provided by the German government to Magna to save Opel.
  • 6.7 billion dollars: Equivalent value of 4.5 billion euros in USD.

Sources:

  • [1] "GM drops Magna plan, revives Opel hopes: GM's board voted to cancel the company's plan to sell a majority stake in its European operations to Magna International and Sberbank." Domain-b.com, September 11, 2009, [http://www.domain-b.com/companies/companies_g/General_Motors/20090911_gm_opel.html](http://www.domain-b.com/companies/companies_g/General_Motors/20090911_gm_opel.html).
  • [2] BBC News, "Germany regrets GM decision", September 11, 2009, [http://news.bbc.co.uk/2/hi/business/8261834.stm](http://news.bbc.co.uk/2/hi/business/8261834.stm).