General Motors is to retain ownership of Vauxhall and Opel. The shock news was confirmed early today after a board meeting in Detroit.

GM said that it had decided to walk away from a deal with Canadian parts manufacturer Magna International due to an ’improving business environment for GM over the past few months‘ and the ’importance of Opel//Vauxhall to GM‘s global strategy‘.

GM president Fritz Henderson said: “GM will soon present its restructuring plan to Germany and other governments and hopes for its favourable consideration.

“We understand the complexity and length of this issue has been draining for all involved. However, from the outset, our goal has been to secure the best long term solution for our customers, employees, suppliers and dealers, which is reflected in the decision reached. This was deemed to be the most stable and least costly approach for securing Opel/Vauxhall‘s long-term future.”

On a preliminary basis, the GM plan entails total restructuring expenses of about 3 billion Euro; significantly lower than all bids submitted as part of the investor solicitation.

Mr Henderson added: “While strained, the business environment in Europe has improved. At the same time, GM‘s overall financial health and stability have improved significantly over the past few months, giving us confidence that the European business can be successfully restructured.”

Business Secretary Lord Mandelson, who has been closely involved in the political talks to safeguard the future of Vauxhall, which employs more than 5,000 workers in the UK at plants in Luton and Ellesmere Port, said: “I am keen for very early discussions with GM over their plans for the business and how they will affect British plants and workers.

GM‘s decision was immediately welcomed by Tony Woodley, a former Vauxhall worker and joint general secretary of the Unite union. He said: “This is an incredible turnaround from General Motors. I am absolutely delighted with this news. It is fantastic news for the UK and right that General Motors does not break up its family and instead retains ownership of Vauxhall, however unions in Germany said workers would begin walk-outs from tomorrow to protest about the reversal.

The German government, which had backed the sale of Vauxhall/Opel also criticised the change of mind and demanded that GM repaid a €1.5 billion loan. German Economy Minister Rainer Bruederle said: “We will get back taxpayers‘ money.”