General Motors, a dinosaur only a year ago, has emerged Phoenix-like from the ashes of bankruptcy. This week it surprised everyone by saying it will not after all sell Opel and Vauxhall, its main European operations. German politicians and union leaders, who thought they had won the tug-of-war over the sale to Canadian car parts maker Magna and Russian Sberbank, are shocked and dismayed. They should not be: although many obstacles remain, GM's decision is good for Europe's car industry.

The imperative efficiently to dismantle Europe's overcapacity in car manufacturing is one that Germany has long been doing all it can to frustrate. Its government - with union leaders' support - was willing to help Magna and Sberbank's purchase to the tune of €4.5bn in loan guarantees for projected restructuring costs.

This stitch-up defied commercial logic: the Belgian investment group RHJ, which GM at one point preferred, offered to make do with €3.2bn. But Magna seemed more pliant to German wishes that job cuts disproportionately happen elsewhere in Europe. This costly employment protection flagrantly breached the spirit of the European single market.