Troubled European brand needs £2.9bn to stay afloat
27 February 2009

General Motors is willing to give up as much 50 per cent of its stake in Opel if it helps its subsidiary to agree a rescue deal with the German government.

Opel needs €3.3bn (£2.9bn) in aid and loans to stay in business, according to company boss Carl-Peter Forster. Reports say that Opel is talking to the Spanish and UK governments, as well as the German Federal government, about aid.

Opel’s management has concluded that it needs to become semi-detached from GM in order to convince EU governments to underwrite bailout loans.

GM has owned Opel since 1929 but reports suggest that if the firm does become semi-independent, it may have to start paying license fees to GM for the use of the new Epsilon 2 and Delta platforms, as well as engine technology.

Opel says it can begin repaying the loans by 2014, after returning to profitability in 2011. The company cannot survive without funds from owner General Motors, but these have come to a halt as the US giant struggles to stay solvent. American government loans to GM cannot be used to prop up its overseas operations.

Opel is also submitting its business plan to the four different German states in which it has factories. Sources say that the car maker hopes that one of them might take a stake in Opel in the same way that the state of Lower Saxony owns a 20 per cent stake in VW.

Opel did not make an official comment on plant closures this afternoon, though they are under consideration, particularly the Eisenach (which it has offered to Daimler) and Bochum plants in Germany, and a factory in Antwerp.

Read more about the plant sell-off to Daimler

Vauxhall’s plant in Ellesmere Port appears to be safe as long as the rescue deal can be pulled off.

However, one source told Autocar that Opel management had calculated the potential savings that would come from using the Opel brand across the whole of Europe. Although these savings were described as "substantial", dropping the Vauxhall badge is not currently on the agenda.

Hilton Holloway

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