Lord Mandelson, the Business Secretary, has criticised the German Government for placing undue pressure on General Motors (GM), the American carmaker that met yesterday to decide on a preferred bidder for a controlling stake in its Opel/Vauxhall business in Europe.

The decision, which will have to be ratified — probably next week — by the Opel Trust Board in Germany, will decide the fate of 5,500 workers at the two Vauxhall car plants in Britain.

Unite, the union that represents most of the Vauxhall workers, favours a bid from RHJ International, the Brussels-based financial investor. Shop stewards believe that this will protect more British jobs.

However, GM has come under intense pressure from Angela Merkel, the German Chancellor, to accept a rival bid from Magna International, a Canadian car parts maker, which is thought to be promising to protect more of the 25,000 Opel jobs in Germany. German federal and state governments have promised to provide €4.5 billion (£3.9 billion) in aid to support operations at Opel once a deal is signed.

This week Jochen Homann, the German Deputy Economics Minister, emphasised his Government’s preference for Magna. With German elections coming up in September, he is reported as saying: “We could envisage making a loan available, then later agreeing precisely how the costs are to be shared out with the other European countries.”

A spokesman for Lord Mandelson said that the Business Secretary was critical of the German approach. He has made clear that the GM board should be objective and base its decision “on commercial considerations and not [be] dictated by political considerations”.

A spokesman for GM Europe would not comment on yesterday’s board discussions, saying only that an official announcement of the preferred bidder was unlikely before the recommendation had been put to the Opel Trust Board, which controls the company’s European operations.

The sale of the business is no guarantee of its survival or its success, or of the survival of the British jobs. Both the remaining bidders have suggested that significant job cuts would be needed. With global capacity in the auto industry standing at 85 million units a year and demand for only 50 million, Britain is unlikely to escape cuts in production.

Meanwhile, British car production in July fell by 17.9 per cent compared with the same month last year, the smallest drop this year and an indication that the pace of decline in output has slowed. Manufacturers said that the Government’s scrappage scheme was starting to stabilise the industry, with a total of 107,635 cars made in July. Car production so far this year is down 45.8 per cent on the number produced between January and July 2008.

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