The decision to scrap the sale of Opel and Vauxhall to Magna has been met with mixed reaction across the industry.
Business secretary Lord Mandelson said he was planning urgent talks with Opel owner General Motors to find out what the u-turn meant for British workers.
“I am keen for very early discussions with GM over their plans for the business and how they will affect British plants and workers.
“I have always said that if the right long-term sustainable solution is identified, then the Government would be willing to support this.”
Tony Woodley, joint leader of the Unite union, welcomed the move. 'There's no logic in breaking up the company. I believe it is the right decision in spite of a good deal that we'd struck with Magna.
'It is the best decision for Britain and our plants. I am absolutely delighted that General Motors have finally done the right thing for them and for us.'
Unite's convenor at Ellesmere Port, John Featherstone, said unions would generally be happy to be dealing with GM, although hard times were still ahead.
'Detail is in short supply and we don't know what the immediate effect will be, but I am pleased we will be dealing with GM because we know them and we understand their culture - and they know us.
'I hope Lord Mandelson will now demand that GM gives us guarantees about future production.'
Workers at Opel, however, were furious GM had pulled out, following a pledge to contribute 265m euros (£238m) a year in pay to help pave the way for the deal.
Opel's senior labor leader in Bochum, Rainer Einenkel, said he thought the decision by the German government to push through the deal was a sweetener for the parliamentary elections on 27 September.
"Unfortunately my suspicion seems to been confirmed that the decision to sell Opel to Magna was connected with the elections later that month in Germany," he said.