UPDATE: GM's Opel Unit Indicates Need For More State Aid
February 20 2009 - 10:34AM
Dow Jones News
General Motors Corp.'s (GM) German Opel unit Friday said that
market conditions have deteriorated dramatically since it asked for
state aid in November, suggesting it may need significantly higher
guarantees than anticipated at the time.
Armin Schild, a supervisory board member at Opel, told Dow Jones
Newswires that the company needs at least EUR3.3 billion in capital
to survive.
GM's largest European brand didn't provide financial
details.
"It's the clear responsibility of Opel's management to paint a
realistic picture and consider the change on European markets when
asking for guarantees from the state," Opel said in a
statement.
German Economics Ministry spokesman Steffen Moritz said Germany
hasn't received any formal request for financial aid from Opel.
However, he added that Germany is waiting for the company to
present its restructuring plan.
Opel said in its statement that the sharp fall in car sales on
major European markets in recent months was "unforeseeable" in
November, adding that unfavorable currency fluctuations of the euro
against the British pound and the Russian ruble added fuel to the
fire.
GM's troubled Swedish Saab brand Friday received creditor
protection so that it can be reorganized, and said it will seek to
become fully independent from GM.
To accomplish this, Saab said it will look for fresh funding
from private and public sources.
The woes embroiling GM's European brands come at a time when the
parent company itself is seeking additional state aid in the U.S.
to stave off bankruptcy.
GM Tuesday said it is counting on $6 billion in financial
support from foreign governments and could potentially need
billions more from the U.S. government in coming years to cover
pension obligations, even if it gets the additional aid it
requests.
However, the structure of GM Europe is set to change materially
in coming weeks, raising questions about the prospects of the
individual brands after the ties to Detroit have been loosened or
cut entirely at a time when all global automakers are being
battered by slumping demand.
Neither Saab nor Opel have said how they plan to disentangle
their ties. For example, the new generation of Saab's 9-5 model is
being developed at Opel's headquarters in Ruesselsheim, Germany,
and was supposed to be produced at the local plant there from the
end of 2009.
The company invested heavily at the Ruesselsheim site for the
9-5 launch, but Saab wants to relocate design, research and
development as well as production back to Sweden as part of the
planned restructuring.
Analysts fear that Opel and Saab both might not have the
required scale to survive as standalone companies.
But calls by German politicians for other local automakers to
help bail out Opel have been met with a chilled response.
Spokesmen for Daimler AG (DAI) and BMW AG (BMW.XE) said the
respective companies aren't interested in buying Opel. A spokesman
for Volkswagen AG (VOW.XE) declined to comment.
Company Web site: www.gm.com
-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com
(Roman Kessler, Katharina Becker, Andrea Thomas and Ola
Kinnander contributed to this report.)