Opel/Vauxhall’s decision to withdraw all applications for government loan guarantees across Europe will now see the automaker fund all requirements internally.
Opel had requested a total of around EUR1.8bn (US$2.2bn) in loan guarantees from several European governments including Germany, the UK and Spain, but Berlin’s decision to turn down the lion’s share of the aid appears to have triggered GM’s sudden U-turn.
GM said its “recently improved financial strength” had been a catalyst in making its decision.
Noting the loan process had proven “much more complex and longer than anticipated,” GM added any further applications – it had applied to the German Länder and the European Investment Bank – were still not finalised.
The guarantees were to form part of Opel’s Europe-wide restructuring that would see a capacity reduction of around 20% but GM is citing its recent improved financial position as a reason it can now fund this process itself.
“We appreciate the support indicated by certain governments, especially the UK and Spain, but we need to move on,” said GM Europe president Nick Reilly. “The decision of the German government last week was disappointing and means the conclusion of these guarantees is again likely to be months away.
“To be clear, our funding needs have not changed and we were led to believe that loan guarantees made available to other European companies under the EU programme to help offset the impact of the global economic crisis, would be equally available to Opel/Vauxhall. But, after a very long process defined by governments, this has turned out not to be the case.”
Expressing gratitude to parent GM, Reilly added Opel could not afford to have uncertain funding plans as well as new complex negotiations when it needed to keep investing in new products and technologies in a bid to return to profitability.
Despite the German setback, Opel had considerable success with requests to the UK and Spanish governments for loan guarantees, with the British administration pledging $330m and a similar amount from Spain. However, even the UK commitment had come under some doubt following the formation of a new coalition government in Britain.
Opel said it would now concentrate on its growth plan that envisages ploughing EUR11bn into future products.