The fate of Vauxhall, the car manufacturer, could be decided next week when General Motors selects one of three bidders for a large stake in its European operation.

Nearly 4,000 jobs at Vauxhall’s plants in Luton and Liverpool are at risk if the successful bidder demands a reduction in the workforce and factory closures.

GM received three offers yesterday for the European business, which includes Vauxhall in the UK, Opel, in Germany, and Saab, in Sweden.

The Detroit-based carmaker would not reveal the names of the bidders, but they are believed to include Fiat, the reinvigorated Italian carmaker. Also in contention are Magna, the Canadian car parts company, and Ripplewood Holdings, a New York-based private equity fund.

The bidders are expected to demand that costs are cut at GM Europe to reduce losses that amounted to $1.6 billion (£1 billion) last year.

GM wants to sell a big stake in its European operations as it struggles to survive. The company could go into Chapter 11 bankruptcy protection in the United States as early as next week, but this is not expected to affect the European sale.

GM Europe is also seeking €3.3 billion (£2.9 billion) in loan guarantees from European governments to keep the business afloat during the economic downturn.

Vauxhall is thought to be seeking €600 million from the Government and if this aid is not made available to the new owner of GM Europe, it may influence whether work is kept in Britain. Vauxhall has two factories, producing small cars and vans. Its Ellesmere Port plant on Merseyside produces the Astra and employs 2,200 people; the Luton van factory, a joint venture with Renault, employs 1,600.

Analysts believe that the size of the British and Irish market, as well as productivity gains at Ellesmere, could guarantee its future, but the Luton van factory might have to be rescued by Renault.

Howard Wheeldon, senior strategist at BGC Partners, the brokerage, said: “Whoever buys GM Europe is going to have to look at factory closures and job losses because there is too much capacity in Europe.”

— Tata Motors raised $840 million (£534 million) through a sale of debentures yesterday to refinance $3 billion of loans taken out to buy Jaguar Land Rover last year. The Indian company has already repaid $1.1 billion of the debt.

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