7 Dec 2008

Vauxhall future 'depends on help' for General Motors

9:44 am on 7 December 2008

Britain's largest car manufacturer, Vauxhall, admits its future depends on a bail-out of its parent company General Motors, by the United States government.

GM needs $US4 billion in emergency funding this month if it is to survive.

Vauxhall, which employs more than 5,000 people in Luton and Merseyside said the negotiations were "highly relevant" to the UK.

The company has denied reports it asked the UK government for financial aid.

GM, Ford and Chrysler are asking the US government for a $US34 billion rescue package.

GM bought Vauxhall in 1925. A spokesman for the company this week said the negotiations in Washington were "highly relevant to the strategic direction of the GM global business and specifically for Vauxhall in the UK".

In October, the Vauxhall car plant in Ellesmere Port, Cheshire stopped production for 14 days because of falling sales in Europe.

Car sales in Britain are down 37% when compared with the same time last year.

Meeting with Minister

The Times reports that Vauxhall has sought "financial guarantees" from the government in an attempt to stave off redundancies.

The company, along with other British-based car-makers and trade body, the Society of Motor Manufacturers and Traders, met Business Secretary Lord Mandelson on 27 November.

The Department for Business, Enterprise and Regulatory Reform has confirmed "financial solutions", including bridging loans for the companies, were discussed at the meeting.

A spokesman for the agency said: "The government is considering these approaches but no decision has been made."