General Motors' German unit Opel edged out Swedish brand Saab and won a crucial contract to build the next generation of GM mid-sized cars in Europe, the world's biggest carmaker said yesterday.
The Opel plant in Ruesselsheim, Germany, and the Saab facility in Trollhattan, Sweden, were competing for the job of making the successor to the Opel Vectra and the Saab 9-3 models from 2008.
After months of review, GM concluded that Opel could do the work for some 200 million less than Trollhattan over time, it said in a statement.
"Both plants presented compelling business cases but, in the end, the scale for this particular allocation tipped in favour of Ruesselsheim," GM Europe Chairman Fritz Henderson said.
Reuters had earlier cited sources familiar with the situation as saying Ruesselsheim had won the contract.
The news comes as a huge relief for Germany, where the auto industry accounts for around one in every seven jobs and unemployment has hit its highest level since the 1930s.
Saab will not walk away empty-handed, however. GM confirmed its commitment to the Saab brand and the Trollhattan plant.
"A major initiative is expected for the expansion of the Saab model line-up," it said, noting it would soon add to the core Saab 9-3 and 9-5 cars a premium "crossover" model that blends characteristics of cars and sport utility vehicles.
In addition, GM will build a new mid-sized Cadillac called the BLS in Trollhattan starting next year.
"Furthermore, the company today committed to build selected Saab vehicles in Trollhattan through 2010," it said. Opel staff on Thursday also clinched a wage deal with GM that labour leaders hoped would win it the prized contract to build the next generation of mid-sized cars. The money-saving concessions hinged on Opel getting the work.
Both Saab and Opel have posted years of losses. Opel said on Friday that 4,500 staff in Germany had taken voluntary severance packages, meeting its goal for cutting jobs this year and avoiding forced layoffs.
Another 1,500 jobs are slated to go in Bochum, Germany, by 2007. Some 3,500 Opel staff have taken early retirement.
US-based GM is in the process of chopping up to 12,000 jobs in Europe - nearly a fifth of its workforce - to stem chronic losses in the region.