Vauxhall owner scraps aid plans

Vauxhall's parent company General Motors has said it cannot afford to wait on an application for Government aid and will fund its own restructuring plans.

The US car giant, a high profile victim of the recession, said applications for UK Government loan guarantees were taking too long and were proving to be "much more complex" than first thought.

General Motors was dealt a blow to its aid appeal earlier this month after the German government rejected a request for state aid.

The previous Labour government had offered a £270 million aid package which was expected to be matched by Spain. However, the protracted application process and the German rejection has forced General Motors to pay for its own restructuring strategy at it Opel and Vauxhall operations.

"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," Nick Reilly, president of GM Europe and chairman of the management board of Opel/Vauxhall, said.

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

A business department spokesman said the Government was "pleased" that the group was now able to fund its own plans and was "looking forward to working with them".

Copyright © Press Association 2010