The filing for Chapter 11 bankruptcy in the US by Europe’s top automotive inward investor, General Motors, may have far-reaching effects on Europe’s flailing automotive industry, as the company disposes of its European arm.

General Motors invested $1.99bn in Europe in 2008, more than any of its major rivals, according to figures from greenfield investment monitor fDi Markets. The bankruptcy filing has forced the 100-year-old company into government ownership and is the third-largest in US history and the largest ever in US manufacturing.


General Motors Europe is not included in the US filing for court-supervised process and the company has said its European facilities will operate as normal with employees and suppliers to be paid in the normal course of business.

GM confirmed in a statement on June 1 that GM Europe has an agreement for $2.14bn of bridge financing from the German government and a memorandum of understanding to partner with Canadian automotive supplier Magna International.

Negotiations to close the agreement should take several weeks. “This has been a very intense and at times difficult negotiation over the past several days,” said GM Europe president Carl-Peter Forster. “With the financing, even with the GM actions in the US, we can now confidently say to our employees, customers, suppliers and dealers that it is business as usual as we go through the process of creating a new, more independent Opel/Vauxhall,” he said.

Sigrid de Vries, communications director for the European Automobile Manufacturers’ Association (ACEA), said it remains to be seen if GM’s investment in Europe will disappear. The industry association advocates keeping as many plants in Europe open even if they are not used to maximum capacity. “That way you ensure investments continue to be made in Europe as long as you maintain a competitive framework and regulation,” she said.

ACEA is promoting the importance of a level playing field in Europe in terms of regulation and business policies, entreating the European Commission to step in and safeguard the application of state aid rules to avoid distortion of the internal European market. “Policy-makers at the highest level in the US are trying to preserve the industry, which is the kind of co-ordinated European policy shift needed in Europe which is lacking,” said Ms de Vries.