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General Motors continues to play hardball over European division

General Motors is rumoured to have called upon the governments of Spain, Britain and Poland to inject over $1.4 billion into the group's ailing European division which is dominated by Opel. This is an ongoing issue which had initially been sorted out months ago before General Motors suddenly decided the terms were not favourable and EU governments should be made to inject more capital into the operation.

Until now the German government has been leading talks on behalf of EU partners because of the significant presence of the GM European division in Germany. However, Lord Mandelson has entered the fray on behalf of the UK and the Vauxhall division which employs tens of thousands of workers in Britain. Whether the UK government, the Spanish government and the Polish authorities will agree to inject over $1.4 billion into the operation remains to be seen with General Motors keen to call their bluff.

Even though the European division has been on the verge of being taken over on a number of occasions there is even talk that the General Motors parent company when in fact retain the operation in the short to medium term. However, this is unlikely to happen as the disposal of non-US assets was a central part of the agreement with the US authorities which led to the bailout of the main business.

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