As Europe struggles to deal with economic uncertainty in wake of the P-I-G-S crisis, General Motor’s European operations has elected to withdraw its application for government Loan Guarantees. According to sources within GM, the process of securing the loan guarantees has become increasingly complex and is taking longer than anticipated. Although some governments had already committed loan guarantees – particularly Spain and the U.K., uncertainty from others, including Germany, at a time when GM has already committed it’s Opel/Vauxhall brands to new programs and technologies, means that the General has decided to withdraw all applications and instead source the money required internally.
In response to the announcement, Nick Reilly, President of GM Europe and Chairman of Opel/Vauxhall’s management board had this to say. “We appreciate the support indicated by certain governments, especially the U.K. and Spain, but we need to move on. The decision of the German government last week was disappointing and means the conclusion for these guarantees are likely months away. We cannot afford to have uncertain funding plans and time consuming, complex negotiations at this time, when we need to keep investing in new products and technologies. To be clear, our funding needs have not changed and we are grateful to the decision and support of our parent company which will allow us to move forward in this very competitive industry.”
Prior to the announcement the U.K. government had already stated it would commit 330 million Euros (approximately $407 million) worth of Loan Guarantees and the Spanish government a similar amount, this out of a total of 1.8 billion Euros (approx $2.21 billion) requested from across Europe. However with the German government seeking to enter new negotiations, GM has pulled the plug on external funding.
Instead, it will forge ahead with the 11 billion Euro investment plan into future products that was announced back in Februrary. This includes the new Opel/Vauxhall Astra and Meriva, plus the Ampera plug in hybrid, scheduled to be released next year (shown).
[Source: Spiegel Online]