5,000 jobs may go as Vauxhall goes on sale

By Karl West
Updated:

 

The future of 5,000 British car workers hung in the balance last night as an increasingly desperate General Motors offered to give Vauxhall away for what one expert described as 'a song'.

Staff at the Vauxhall Car Plant in Luton

Going for a song: Vauxhall has 5,000 workers in the UK.

Detroit-based GM was said to be talking to at least six investors including private equity firms in the hope of finding someone willing to pay at least £440m for a majority stake in its European arm.

GM, which is on the verge of bankruptcy because of high costs and plunging sales, would make nothing from the deal as the investment would be pumped directly into Vauxhall and Opel.

The Chinese carmakers Shanghai Automotive, which owns the rump of MG Rover, and Geely are among those believed to be interested. GM is surviving only thanks to £9.2bn of US government loans and has been given 60 days to restructure its business radically to win further handouts.

Failure will mean bankruptcy for a firm which employs more than 50,000 workers in Europe, including 5,000 at Ellesmere Port, Cheshire, and in Luton. It has owned Vauxhall since 1925.

Industry experts yesterday questioned whether GM's haste to offload the European arm on the cheap is because it expects the subsidiary to make huge losses for years.

Professor Garel Rhys, of Cardiff University-said: 'I think it's quite remarkable if GM does go down this route. Is the underlying position of GM Europe worse than GM has said?

'They are probably worried about it being a drain on the group's resources. Whoever buys it, they are getting it for a song - it really is a giveaway.'

It is thought that any deal will attract close scrutiny from regulators in Germany where Opel employs 25,000.

This means that any buyer would probably have to pursue a traditional investment strategy of building up the business and adding to its value over time.

Any attempt by a private equity firm to make a profit by slashing costs and selling the business quickly would provoke outrage.

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