Opel To GM: Don't Touch Our Bailout Money

[Oracle of Delphi]

General Motors' European unit "won't provide a single cent" of the aid it might get from the German government.

General Motors might be burning its way through cash but it won't get a chance to even singe any bailout money that its European subsidiary might get. Adam Opel has said it will keep any funding it gets from the German government, even as its ailing parent company has revealed it is close to bankruptcy.

"We as employees will make our contribution in this difficult time to ensure future investments," said Klaus Franz, deputy supervisory board chairman of GM in Europe said Saturday. "But we won't provide a single cent, which then would be burned from GM."

On Monday, German Chancellor Angela Merkel, Finance Minister Peer Steinbrueck and Economy Minister Michael Glos were scheduled to meet with top Opel executives to discuss the company's request for loan guarantees.

Franz, who is also the top labor representative of General Motors' (nyse: GM - news - people ) European division, said that "Opel has no liquidity problem. This is purely a precautionary measure." Opel, which employs some 26,000 people in Germany, on Friday became the first European carmaker to request financial help from the state to maintain its business, a sign that it could no longer rely on its Detroit parent to cope with sliding demand.

Michael Tyndall, an analyst with Nomura International in London, said it made sense for Opel to look after its own interests. "It's a case of local government needing to address the concerns of local businesses," he said. "Likewise, I'm not sure a rescue package in the U.S. will flow through to GM in Europe."

Earlier this month, GM posted a net loss of $2.5 billion for the third quarter, compared with a net loss of $38.9 billion, in the third quarter of 2007. The company, which spent around $6.9 billion in the last three months, said it could run short of cash in just two months.

Automakers in both the United States and Europe are facing slower sales as faltering economies spell weaker consumer demand and a lack of confidence in the financial sector affects their own financing. Consumers are also struggling to get loans to buy their cars, which is hurting the industry enormously. (See "Credit Crunch Hits European Autos.")

Earlier this year, the U.S. Congress approved a $25.0 billion rescue package to help the three biggest carmakers in the United States survive a steep decline in consumer spending. European car manufacturers are currently pushing for a similar 40.0 billion euro ($50.7 billion) bailout package.

Meanwhile, Swedish Finance Minister Anders Borg said Monday that his government was considering measures for Swedien's auto industry, according to TradeTheNews, which could mean assistance for truck makers Volvo and Scania. Shares of Volvo slipped 0.6% and Scania was down 0.9% on Monday in Stockholm.

Link: http://www.forbes.com/markets/2008/11/17/o...7markets04.html

[black02]

General Motors' European unit "won't provide a single cent" of the aid it might get from the German government.

General Motors might be burning its way through cash but it won't get a chance to even singe any bailout money that its European subsidiary might get. Adam Opel has said it will keep any funding it gets from the German government, even as its ailing parent company has revealed it is close to bankruptcy.

Makes sense. I can't see the Germans lending money that would just end up in Detroit.

[z28luvr01]

Psst...if GM goes under, so you you, Opel.

Never bite the hand that feeds you. Can't say I blame Opel for their position, but they just bit off a pretty big chunk of GM's hand right there.