General Motors is to contribute €1.9 billion in funding for the reorganisation of its Opel and Vauxhall divisions.
This is a tripling of its previous investment pledge of €600 million.
GM will now contribute more than 50% of the overall funding requirements. It means the loan guarantee requests to European governments will be cut from €2.7 billion to under €2 billion.
GM needs the money to fund cutbacks of 17% of Opel’s workforce and 20% of production capacity in the next two to three years.
The reorganization, including the introduction of 12 models and the closure of a Belgian plant, would help the brand break even in 2011 and make money in 2012.
“GM’s €1.9 billion commitment is the right course of action for Opel/Vauxhall and should clearly signal our determination to fix our business,” said Nick Reilly, CEO of Opel/Vauxhall.
“Our call for the additional funding was approved by GM’s senior management and supported by the GM board of directors.
"Meanwhile, we have shared this decision with the European Commission as well as the national and state governments involved.
"We hope that our strong commitment will be well received as a major milestone in our ongoing discussions about government guarantees to cover the remaining gap.
“We greatly value the much increased support from GM, particularly given the high-priority demands on their liquidity, not least the restructuring of GM’s North American operations and coping with a continuously weak market in North America."
Ed Whitacre, GM chairman and CEO said: “It is of vital importance for GM to demonstrate our commitment for our European operations.
"Beyond the purely financial aspects, we see this as a major step towards instilling renewed trust and confidence into Opel/Vauxhall’s customers, employees, business partners, unions, dealers and European governments.”