Create a free account to continue

Automaker Opel Seeking Government Aid

Spokesman for Adam Opel GmbH, which is owned by GM, says it will seek help from the German government as the financial crisis grips European car makers.

WIESBADEN, Germany (AP) -- Carmaker Adam Opel GmbH, a unit of General Motors Corp., said Friday it will seek loan guarantees from German authorities as the financial crisis grips the European auto industry.

The company said it would seek guarantees for an unspecified amount from the federal government and from the governments four states where it has facilities β€” Hesse, Thuringia, Rhineland-Palatinate and North Rhine-Westphalia.

Chief Executive Hans Demant said that the guarantees would help not only to secure jobs in Germany, but ensure the company's future across Europe.

"The goal is to safeguard Opel's competitiveness even in this difficult global situation," he said.

The Economy Ministry in Berlin said it was already in contact with Opel, which employs approximately 25,000 workers in Germany.

"Opel must now put concrete figures on the table so that we can analyze the situation," a ministry statement said. "On this basis, we will conduct talks within the federal government and with the states."

Opel's move followed a letter sent earlier this week by Demant, employee council chief Klaus Franz and GM's European president, Carl-Peter Forster, to Chancellor Angela Merkel in which they outlined their concern over the situation of the German auto industry.

Opel spokesman Andreas Kroemer said on Monday that the letter called for tax breaks to buy new cars, arguing that such a move would be "socially and ecologically astute."

Kroemer said they also called for incentives for consumers to buy new, fuel-efficient cars and abandon cars that are more than 10 years old.

Opel began building automobiles in 1899. It was acquired by GM in 1929.

The company has three car manufacturing plants in Germany: Bochum, where it builds the Astra and Zafira models; Eisenach, where it makes the Corsa; and its main Ruesselsheim plant, where it builds the Vectra and Signum. It also produces engines at an assembly plant in Kaiserslautern.

In 2007, the car maker built 549,349 cars in Germany, up 6 percent from the previous year's 516,570.

GM sold a total of 330,590 cars in Germany last year, including 299,239 Opel-branded vehicles. It is the third most popular brand in Germany, behind Volkswagen and Mercedes-Benz.

Opel also builds cars in Belgium, Poland, Portugal and Britain.

Last week, parent company GM reported a $2.5 billion third-quarter loss and said it is burning so much cash that it could reach the minimum amount required to run the company by the end of this year.

While it has said bankruptcy is not an option, GM is lobbying urgently with the U.S. government for part of $25 billion in low-interest loans for the battered auto industry.

U.S. automakers have been hit hard by the global economic slowdown and U.S. economic woes that have kept customers from buying vehicles. October was the worst U.S. sales month in 25 years.

More in Supply Chain