GM Withdraws Aid Applications For Opel, Vauxhall

General Motors said it is withdrawing applications for some $2.2 billion in European government aid to its Opel and Vauxhall units and will fund their restructuring itself.

BERLIN (AP) -- General Motors Co. said Wednesday that it is withdrawing applications for some euro1.8 billion ($2.2 billion) in European government aid to its Opel and Vauxhall units and will fund their restructuring itself.

The announcement came a week after Germany's government rejected GM's request for loan guarantees for Opel. The automaker said it needed to move ahead with its plans after months of wrangling over aid, and said its own improved finances were a factor in the decision.

GM said that its funding requirements haven't changed, and neither had the reasons for requesting government loan guarantees. But it said that the process was "much more complex and longer than anticipated and the results are still not finalized or certain."

Britain's government committed loan guarantees to the tune of euro330 million and Spain had indicated that it would commit a similar amount, GM said in a statement. The governments of the four German states where Opel has plants also had voiced willingness to negotiate contributions.

However, Opel and Vauxhall CEO Nick Reilly said that "we need to move on."

"The decision of the German government last week was disappointing and means that the conclusion of these guarantees is again likely to be months away," he said.

GM's move ends lengthy maneuvering over European aid for Opel and Vauxhall.

Last November, GM abruptly canceled the planned sale of a majority in the units to a consortium led by Canadian auto parts maker Magna International Inc., instead deciding to restructure the brands itself.

That decision irked Germany, which had pushed hard for the sale and had been prepared to offer financial support for it.

Earlier this year, GM sought aid from European governments as it presented a restructuring plan that foresees some 8,300 job cuts across the continent.

The two brands employ around 48,000 people in Europe, roughly half of them in Germany

In May, GM reported an $865 million first-quarter profit, its first positive quarter in three years. The profit came as global auto sales started to recover and despite a $506 million loss in Europe, the only place GM lost money.

In making his decision, German Economy Minister Rainer Bruederle had cited GM's own improved finances.

"We are grateful for the decision and support of our parent company, which will allow us to move forward with confidence in this very competitive industry," Reilly said Wednesday.

"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," he added.

"With these new products and the impact of restructuring, we expect to return to profitability shortly."

Opel and Vauxhall will now be able to concentrate fully on implementing its plans, in particular a euro11 billion project to invest in future projects that was announced in February, GM said.

Last month, GM and Opel worker representatives reached a deal under which employees would contribute savings of more than euro1 billion through 2014 to help the restructuring drives. GM noted that the agreement was not tied to government guarantees.

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