Lord Mandelson will today seek private talks with the board of General Motors to discuss the future of about 5,500 Vauxhall workers in Britain after the American car giant scrapped advanced plans to sell its European business.

GM had agreed to sell Opel and Vauxhall to Magna, a Canadian car parts supplier, to raise cash after almost being bankrupted this year.

Last night the board of GM met in Detroit, where the carmaker is based, and decided to scrap the plan.

It is understood that the American board had become anxious that the planned sale of Vauxhall and Opel could see the two car manufacturers competing against its former parent in high-growth markets such as Russia.

The Business Secretary is understood to be prepared to dangle loan guarantees of up to £400 million as part of negotiations to secure the jobs at Ellesmere Port in Cheshire, where the Astra is manufactured, and at the Luton plant, where the small Vivaro commercial van is made.

The decision to shelve the Magna sale respresents a blow to Angela Merkel, the German Chancellor, who had championed the Canadian deal because it protected the most Opel jobs in her country. With the Magna deal now scrapped, the negotiating table is clear again to discuss how inevitable job cuts will be carved up across the European operations.

Lord Mandelson believes that he has a strong negotiating hand to secure as many of the workers’ futures in the UK because both Ellesmere Port and Luton manufacturing plants boast impressive efficiency levels.

Until the board meeting last night in Detroit, GM had planned to sell a 55 per cent stake to Magna International and its partner, the Russian lender Sberbank. GM’s board made the decision at a day-long meeting after also determining that a ¤3 billion (£2.7 billion) restructuring plan was significantly lower than bids submitted for the division.

Fritz Henderson, the GM chief executive, added that Europe’s business environment and GM’s overall health have both improved since it put the division up for sale. Mr Henderson said in a statement that GM will present its restructuring plan to the German government soon.

The surprise decision to shelve the sale came even though Opel’s unions yesterday reached an agreement with Magna for ¤265 million a year in cost cuts. Mr Henderson said that Magna will work with Europe’s unions “to develop a plan for meaningful contributions to Opel’s restructuring”.

GM, which has lost more than $80 billion (£49 billion) in the past four years and has received about $50 billion in aid from the US Government, had announced plans to sell Opel to focus on profitable regions, including Latin America and Asia.

The potential sale had been fraught with complications. In August GM rejected a deal to sell Opel to Magna because it preferred the Brussels-based investor RHJ International SA.

The offer from RHJ required less government aid but appeared likely to involve more job cuts in Germany.Last month the EU set a deadline of November 27 to decide whether the Magna and Sberbank takeover could cause competition problems. The EU also was considering examining German government subsidies to Opel.

Tony Woodley, the general-secretary of Unite, said of the move: “It is the best decision for Britain and our plants. I am absolutely delighted that GM have finally done the right thing for them and for us.”

GM TIMELINE:

October 2008: GM shares fall below $5

December: Vauxhall asks Lord Mandelson for financial guarantees from the Government

February 2009: GM cuts 47,000 jobs. It seeks partners for its European businesses, including Opel and Vauxhall

March: GM presses UK Government to take a £500 million stake in Vauxhall

May: GM signs an initial agreement with Magna International to buy Opel and Vauxhall

June: GM declares bankruptcy

October: EC says Magna takeover may breach state aid rules

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