Page last updated at 20:21 GMT, Wednesday, 11 November 2009

Germany tells GM to go it alone

GM and Opel logos
GM had agreed to sell Opel to Magna in September

Germany has told General Motors it will have to come up with the money to refinance Opel, after the US carmaker cancelled the sale of its European arm.

Economy Minister Rainer Bruederle told GM executives that they had to be responsible for restructuring the unit.

Germany had previously offered 4.5bn euros ($6.7bn; £4.1bn) to support Opel and protect German jobs if the company was sold to car parts maker Magna.

On cancelling the sale last week, GM said it would still seek state aid.

The German minister's comments now raise question marks over whether GM will get it.

"I expressed my expectation that General Motors should basically carry out the financing itself," Mr Bruederle said.

'Low blow'

GM had been negotiating with Magna and its partner, the Russian bank Sberbank, for months.

Last week, it decided to keep hold of Opel, and Vauxhall in the UK, due to what it described as an "improving business environment".

At the time, Mr Bruederle called GM's decision to call off the sale as "totally unacceptable", while Christine Lieberknecht, the premier of Thuringia state which hosts an Opel plant, called the decision a "low blow".

The US giant's decision to sell its main European business was made after it was forced to announce a group-wide loss of $30.9bn for 2008. Sales had plummeted in the global recession.

However, aided by financial support from the US government and a brief period in US bankruptcy protection in June and July of this year, GM has since managed to turn around its fortunes.

Last week the carmaker said its US sales had risen in September for the first time in almost two years.

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