General Motors appears to have reached a deal to sell Vauxhall and Opel to Canadian car parts group Magna International.

The two sides are thrashing out the final details of a memorandum of understanding that would help Magna tap into £1.3 billion of bridging loans it needs to clinch the deal.

A deal would also protect Vauxhall/Opel if, as expected, GM files for Chapter 11 bankruptcy protection in the US.

The plans were laid out before German Chancellor Angela Merkel at a meeting this evening.

Merkel has been fighting hard to limit the damage if Opel is sold off. The last thing she needs in an election year are thousands of job losses.

That, in turn, has increased pressure on the British Government which has been criticised for not going into bat for Vauxhall's 5,500 workers in the UK.

Unions fear Vauxhall factories could be closed to save German jobs.

Magna has pledged to pump up to £612m into the companies.

Under the plan GM will retain a 35 per cent stake in the newly independent group. A further 10 per cent shareholding would be held by Opel workers.