Caught up in the crisis plaguing US parent company General Motors, Sweden's Saab filed for bankruptcy protection Friday while German carmaker Opel said it needed billions to weather the downturn.
GM's troubles have spread to its European subsidiaries
Loss-making Saab became the first European casualty of ailing GM's global shakeup as it filed for bankruptcy protection and applied to be spun off as an independent company. That move came after GM decided to cut the cult brand adrift after the Swedish government refused to inject money into the auto manufacturer.
The future of Opel looked equally uncertain Friday as reports surfaced that the German subsidiary would need more than 3 billion euros ($4 billion) in loan guarantees from the German government -- nearly double original estimates -- to weather the downturn.
Opel confirmed the upward revision of original figures, believed to have stood at around 1.8 billion euros in loan guarantees, but would not specify the revised amount.
However, a member of Opel's supervisory board, Armin Schild, confirmed Friday that the carmaker needed at least 3.3 billion euros to weather the financial crisis, news agency AP reported.
Schild said that if the German government provided the revised loan guarantees, Opel would be able to step away from its reliance on GM, AP reported.
Opel is worried about the fallout from the US
Opel said that sales in important markets such as Spain had collapsed to a degree that had not been foreseeable late last year.
Since initial assessments, "the situation with regards to sales has changed dramatically in the large European markets," Opel said in justification of the revised loan guarantee estimates.
"On top of that are the consequences -- painful for Opel -- of exchange rate changes in markets such as Britain," the carmaker said, adding that these were factors that needed to be taken into account in the request for state guarantees.
Filing for reorganization
Meanwhile, in Sweden, Saab spokeswoman Margareta Hogstrom confirmed that an application to reorganize the brand into an independent company had been filed. The process of reorganization in Sweden is roughly equivalent to going into Chapter 11 bankruptcy in the US.
The reorganization will place Saab under court supervision with the aim of creating a "fully independent" business entity, according to a press statement issued by the company. The process is likely to take some three months, Saab said.
"Reorganization will give us the time and means that help get these products to market while minimizing the liquidity impact of Saab on GM," CEO Jan Ake Jonsson said in the statement. "We explored and will continue to explore all available options for funding and/or selling Saab."
Sweden unimpressed by GM offer
These are difficult times for SAAB CEO Jan Ake Jonsson
Swedish daily Dagens Industri said GM had told unions at a Saab board meeting on Thursday that it was prepared to put 3.5 billion Swedish krona (320 million euros, $400 million) into the firm if the Swedish government guaranteed a 5.2 billion krona loan.
But the government, locked in an increasingly acrimonious stand-off with GM, refused to accede to the request. Many analysts speculate that the firm will need much more money to turn it around.
Stockholm accuses the US company of failing to make the necessary investments to create attractive models and maintain its technological edge.
The Swedish government on Wednesday said that it would not take over ownership of the company and during question time in parliament on Thursday, Enterprise Minister Maud Olofsson said "it is not the government that should salvage Saab, it is up to GM."
Cutting legal ties could save GM hundreds of millions of dollars in costs if Saab were to go bankrupt.
Saab made an operating loss of 2.19 billion Swedish krona in 2007, according to regulatory filings. GM bought 50 percent of Saab in 1990 and took full control in 2000. It has long been unprofitable.
Observers say the company faces a difficult mission to survive in its current form in today's economic climate. Restructuring could allow some parts of Saab to survive and enable suppliers to, at least, recover some of their money.
Tens of thousands of jobs could be lost if Opel goes under
In Germany, Finance Minister Peer Steinbrueck and Economics Minister Karl-Theodor zu Guttenberg have not ruled out the possibility of state aid or guarantees to Opel, but said it was dependent on GM presenting a viable restructuring concept.
The news magazine Der Spiegel reported on Friday that the Ruesselsheim-based automaker was suffering more than expected as a result of the dramatic slide in European markets.
This week, executives from the US parent company said for the first time that they were ready to take on partners or share control of the German automotive firm with a third party.
Analysts said Thursday that the company needed a strategic partner to survive. Unions also agree that the company could not go it alone because it is too small. Sales fell by 10 percent last year to 1.5 million vehicles.
Auto industry expert Willi Diez told Germany's Bild newspaper that an Indian or Chinese manufacturer could take over Opel.
"The Indian Tata concern, or the Chinese manufacturers Chery and Geely would be potentially interested in the Germany company," he said.
Jobs on the line
Opel employs around 26,000 people in Germany in four plants. Saab is smaller, with a workforce of some 4,100 people in Sweden, 3,700 of them at its Trollhaettan plant. A total of 15,000 Swedish jobs are believed to be at risk if the company closed.
The cars division of Volvo, Sweden's other major auto brand and a subsidiary of US automotive giant Ford, is also making a loss and up for sale and many other big manufacturing firms have made job cuts as export order books dry up.
General Motors presented its restructuring plan to the US Treasury on Tuesday as a condition of its $13.4 billion government bridging loan. It pledged to cut 47,000 jobs worldwide, to close plants, dump brands and slash production, notably in Europe where it seeks to save more than 1 billion euros.