Thousands of jobs at Vauxhall appeared to have been secured yesterday when General Motors, its American owner, agreed a deal to sell its European operations.

Talks between GM and the German Government were continuing in Berlin after the company signed an initial agreement with Magna International, the Canadian car parts company, to sell Opel and Vauxhall.

Lord Mandelson, the Business Secretary, said that it was “pretty likely” that the deal would be done, making Magna, along with its partner Sberbank, the Russian state-controlled bank, and GM the new “shared owners” of Vauxhall.

Lord Mandelson said that he would seek swift confirmation from Magna that no Vauxhall jobs would be lost.

“I will be seeking from them reinforcement of the commitment they gave to me last week to continued production by Vauxhall here in the UK,” he said.

“They made clear to me that they are committed to continued production by Vauxhall in the UK. I take that at face value.”

Union officials reacted cautiously to reports that a deal had been reached. A spokesman for Unite said: “The Government needs to work with whoever buys GM Europe to ensure that the plants and jobs in the UK are protected. That is the key to this — government support for the GM jobs in the UK so there is a long-term future.”

John Fetherstone, the Unite convenor for the Vauxhall plant at Ellesmere Port, said: “Hopefully the short-term future will be sorted out but . . . the situation is still unclear.”

Lord Mandelson added that both the British and German governments thought it would have been better if GM had “continued a bit of competition for ownership and kept more players in this race”, rather than deciding on Magna so quickly. However, the deal needed to be done before GM files for bankruptcy in the United States as expected on Monday.

Fiat, the Italian carmaker that was the only remaining bidder for GM’s European division, dropped out on Friday because of “unreasonable risks” in the possible agreement on offer.

Meanwhile, there was more positive news for the troubled British car industry as the Government said more than 35,000 new cars have been ordered via the car scrappage scheme since it was introduced last month.

Industry experts said that as few as 7,000 of these vehicles — 20 per cent — were likely to have been built in British factories. A £2,000 discount, funded equally by the Government and industry, is available to motorists who trade in a vehicle more than ten years old while buying a new car. The scheme encompasses all car marques, including those built abroad.

A spokesman for the Department for Business, Enterprise and Regulatory Reform said: “We are really pleased that the scheme seems to be delivering a boost so early.” The rapid rate of take-up since its launch on April 22 means that more than a tenth of the £300 million subsidy available has already been allocated, raising concerns that all the funding could be exhausted by the end of the year. The Society of Motor Manufacturers and Traders (SMMT) estimated that only between 20 per cent and 25 per cent of vehicles in the scheme would have been built in Britain.

Britain’s car industry has been struggling in the face of 11 consecutive months of declining car sales. Industry figures showed that total British car production plunged by 55.3 per cent in April against a year ago. The SMMT said that 68,258 cars were produced in April. So far this year, 251,268 cars have been produced, 56.2 per cent lower than a year ago.

Commercial vehicle production fell by 65.2 per cent on the year to April, leaving total vehicle production down by 56.5 per cent on a year ago.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive