As General Motors Co. has chosen to withdraw applications for loan guarantees from various European governments, it will now fund the Opel/Vauxhall restructuring on its own. The reorganization plan that GM has developed costs $4.5 billion to accomplish.
The plan aims to reduce its European capacity and workforce by a fifth and revive the majority of Opel's model range through the end of 2014.
Just last week, GM's request for 1.1 billion euros from Germany's state rescue fund was denied. Germany had set up this rescue fund for companies affected by the economic recession. Earlier, Spain and the UK have expressed their willingness to give GM the aid it sought.
According to Opel CEO Nick Reilly, GM can't afford for its funding plans to be uncertain and to engage in lengthy complex negotiations at a time when it has to continue to invest in new products and technologies.
In a statement, Opel said that a decision has been made "to fund the requirements internally" as there is a need for the plan to progress quickly. A factor that has influenced GM to make this decision is its improved financial strength.
Reilly clarified that Opel's funding requirements were unchanged. He said that with the support of Opel's parent company, it will "move forward with confidence" in this highly competitive industry. He pointed to the new products and the impact of restructuring as factors that will help in making Opel profitable once again. [via autonews]