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Germany

Struggling carmaker Opel gains brief respite

Struggling German carmaker Opel has reportedly gained a four-month respite due to good sales of its new auto model Insignia.

An old Opel car for sale

Opel needs an investor if it is to survive the crisis of the auto industry

The Ruesselsheim-based company unexpectedly secured sufficient funds to keep the company afloat for another four months, according to the German daily Bild.

Opel was reportedly able to accumulate a small financial cushion, neutralizing financial threats that were expected to hit the company in May, due to good sales of its new Insignia model. The new funds would temporarily ensure Opel's financial stability in the event of an insolvency of the US parent company General Motors, according to Bild.

The chairman of Opel's works council, Klaus Franz, was quoted as saying that "liquidity has been secured. We have time to build Opel Europe."

Previous reports suggested that the carmaker required urgent financial aid by May if it was to survive the current crisis of the auto industry.

Opel, which employs about 25,000 people in Germany, has said it needs 3.3 billion euros ($4.4 billion) in state aid from European governments to save jobs and keep plants open. Opel also has plants in Belgium, Spain and the United Kingdom, where it makes Vauxhall brand cars.

Chancellor Angela Merkel with Opel workers in Ruesselsheim

Chancellor Angela Merkel is under pressure to help Opel

The German government has repeatedly spoken against a financial bail-out for Opel, preferring a private investor or partners from within the industry. But four German states with Opel factories are seeking ways to save up to 50,000 jobs linked to Opel and its supply chain.

German Chancellor Angela Merkel, who faces an election in September, is under pressure to help Opel, which traces its roots back to the 19th century. But Merkel has warned that she won't be party to a Holzmann-style bailout, in which her predecessor Gerhard Schroeder engineered a last minute deal to save the Frankfurt construction giant, only to watch it collapse less than three years later.

Surgical GM bankcrupty looming

Opel's US parent company GM is scrambling to find a third-party investor for its European arm ahead of a 60-day US government deadline to cut back costs and operations or face a "surgical bankruptcy".

GM, which is operating with 13.4 billion dollars in emergency federal loans, has until June 1 to win concessions from creditors and the auto workers' union. If this fails, Washington is reportedly planning to divide GM's "good" assets from its unhealthy ones.

GM has lost some 80 billion dollars over the past four years. However, the company has been brought to the brink only in the last few months as the US recession drove US car sales to 25-year lows.

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