Automaker General Motors Corp. (MTLQQ.PK), according to reports on Tuesday, plans to cut production capacity by 20% to 25%, and cut about 10,000 of the 55,000 jobs across Europe as part of its planned restructuring of its European operations, that include its German unit Adam Opel GmbH and British sister brand Vauxhall. The restructuring plan is expected to move forward in the next two to three weeks, reports stated.
Detroit, Michigan-based car maker GM, which emerged from bankruptcy in July, said in early November that its board has decided to retain its European operations, citing the improving business environment as well as the brands importance to GM's global strategy. The new GM has instead initiated a restructuring of its European operations, which could see total restructuring expenses of about 3 billion euros, and a loss of about 10,000 jobs, or a fifth of the European workforce. GM had noted that the restructuring cost is significantly lower than the bids received for the two brands.
In early September, GM agreed to sell its majority stake in Opel and Vauxhall to a consortium led by Canadian car-parts maker Magna International, Inc. (MGA, MG-A.TO). Magna teamed up with Russian auto maker OAO GAZ Group and state-controlled Russian financial group OAO Sberbank for the deal. The deal was originally expected to be signed in early October and close by the end of November. The German government has helped Magna to win the bid by offering 4.5 billion euros or US$6.4 billion in state aid.
In August, reports stated that GM was considering abandoning the Opel/Vauxhall sale and instead planed to raise about US$4 billion from the U.S. and other European governments, including the UK and Spain, as an alternative to selling the units.
Following the calling-off of the sale, GM has now initiated talks with various European governments for a positive response on funding its restructuring as well as to invest in new products. The new acting head of European operations and head of GM's international operations, Nick Reilly, has already had talks with the governments in the U.K., Belgium and Poland. He would now head to Spain for talks on similar lines.
Lord Peter Mandelson, Britain's business secretary, has said that Britain is prepared to underwrite GM's restructuring plan for its European operations, which present "a solid commitment" to Vauxhall's two U.K. plants.
GM plans to have agreement in principle on loans or guarantees from the governments within three weeks, and a restructuring plan implemented by the end of this year. GM also intends to provide some of the amount, depending on the outcome of its talks on government aid.
Earlier reports also said that union leaders at Vauxhall, which employs 5,500 people, would see that the number of jobs lost is minimized and will also ensure that they are voluntary. Germany's powerful workers' union, IG Metall reportedly has said that workers at Opel's four German plants would hold warning strikes today in protest at GM's decision.
GM also stated Monday that it has begun to repay the German government loans which were extended to support Opel, and had a balance of 900 million euros as of September 30, 2009. Opel has already repaid 500 million euros of that in November, and will repay the remaining 400 million euros by the end of the month. The cash balance in Europe as of September 30, 2009 was US$2.9 billion.
MTLQQ.PK closed Tuesday's regular trading session at $0.658, up $0.018 or 2.81% on a volume of 9.39 million shares, higher than the three-month average volume of 6.98 million shares.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.