Opel/Vauxhall chairman Nick Reilly says he can't understand decision
9 June 2010

GM is “very disappointed” that the German government has thrown out a request for 1.1 billion euros of state aid for Opel, but has vowed to fill the funding gap with other borrowings.

“I am struggling to understand the thinking behind this decision, and we are very disappointed after such a very long process,” said Opel/Vauxhall chair Nick Reilly.

A committee of four experts was split 50/50 over the loan, leaving German economy minister Rainer Bruederle with the casting vote.

Reilly said he disagreed with the two main reasons – that it wasn’t the role of EU governments to support the car industry and that GM has enough money to fund Opel on its own.

“Last year the EU supported the auto industry to the tune of 8.5 billion euros and Opel received none of that. That’s EU governments supporting the car industry,” said Reilly.

The recent crisis in the Eurozone and German bail-out of Greece, were significant contributing factors, he added. “If we’d been doing this earlier in the year, I think we’d have had a different outcome,” said Reilly.

GM now expects to find funding itself and to stick to the restructuring and investment plan outlined earlier this year.

Reilly believes that GM “probably” could fund Opel on its own.

“But we’re looking for funding to keep going through this very low market we find ourselves in.”

GM has already helped out its European subsidiary this spring when its financial position improved faster than expected.

In March it unexpectedly pumped in 1.9bn euros to pay for a restructuring plan that made 5000 staff redundant.

A solution to finding 1.1bn to fund new models and technology has been suggested by the German government — find support from the four German lande, the federal states where Opel has facilities.

But that looks likely to supply only half the required sum: “Had we known that this was the route, we would have gone there rather than apply to the government as instructed,” said Reilly.

GM will have to make up the shortfall with cash at commercial rates, which will make its borrowings much more expensive, eroding its future competitiveness.

Riding on the outcome are key investment programmes in new models and more advanced petrol and diesel engines and hybrid and electric powertrains.

Despite spending the best part of six months negotiating this aid, Reilly says these programmes are still forging ahead and are not facing delays.

He also expects a decision from the lande in much less than six months: “We get the applications in and decisions soon after. It won’t take another six months.”

GM is also waiting for a decision from the UK government on EU330m of loan guarantees for investment at Ellesemere Port in the new Astra estate and Ampera hybrid.

Funding was promised by the Business department in the last months of the Labour government, but all these decisions are being reviewed by the new Con-Lib coalition.

“We expect this funding to come through. We’ve been told that as long as the funding leads to a positive outcome for the economy, it’s safe.”

Julian Rendell

Join the debate


10 June 2010


12 June 2010

With the unprofessional conduct from GM last year I'm not surprised. Germany put vast amounts of money in OPEL while GM played the 'will we won't we game'. GM's plan is to invest 9 Billion in OPEL to revamp their lineup, and cut jobs. Why should any state give money to help a company get rid of employees. That money will be better used to support the ex-OPEL workers in benefits and retrain them for future employment.

Add your comment

Log in or register to post comments

Find an Autocar car review

Driven this week

  • Dallara Stradale
    The Stradale is the first road-legel car from Italian motorsport constructor Dallara
    First Drive
    16 March 2018
    The motorsport constructor's first road car is inspired by Lotus minimalism. Does it thrill on road and track?
  • Hyundai i30 N
    Standard spec is good so paint colour is our car’s only option
    First Drive
    16 March 2018
    What’s Hyundai’s first hot hatch and N-brand debutant really like? Let’s find out
  • Porsche Boxster GTS
    This is the new GTS version of the Porsche Boxster
    First Drive
    15 March 2018
    The 718-generation Boxster is our favourite roadster of the moment – so is this new GTS variant worth the extra outlay?
  • BMW 5 Series
    First Drive
    15 March 2018
    The BMW 5 Series is top of the mid-exec pack, but is there still room for a diesel saloon in everyday family life?
  • Audi A7 front
    First Drive
    14 March 2018
    The new Audi A7 Sportback looks the part, but how does the new Mercedes-Benz CLS rival cope on UK roads? We find out