Opel's survival hanging in balance, future bleak

BEIJING, March 14 (Chinese media) -- U.S. automaker General Motors' German affiliate Opel has seen its survival hanging in the balance in recent weeks with no support from its parent company or the German government in sight.

Eighty years after being acquired by GM, Opel was plunged into crisis by its beleaguered parent, which is facing the threat of bankruptcy under the impact of the worst financial crisis in decades.

GM registered a 30.9-billion-dollar loss last year and said that 2009 would be a tough year, despite 13.4 billion dollars in aid from the U.S. government.

If Opel collapses, around 400,000 jobs will be lost across Europe, with 25,000 of those at the four plants in Germany.

　　BAILOUT PLAN SHELVED

To exit the quagmire, GM has submitted to the German governmenta bailout plan that features 3.3 billion euros (4.2 billion dollars) in aid from Germany and other European countries where it operates factories.

But Chancellor Angela Merkel has said that GM must overhaul the rescue plan and her government would aid Opel only if the benefits outweigh the costs.

"We will support firms like Opel only if our help ensures a good future for these companies and doesn't just uselessly go up in smoke because a company has failed in the market," she said.

A decision on state aid for Opel will take weeks, said Economic Minister Karl-Theodor zu Guttenberg.

Analysts said German officials are worried that Opel's strong dependence on its parent would result in state aid being siphoned off to the United States.

Besides, other companies may also rush to grab state aid if the government aids Opel, as they are also struggling to cope with an unfavorable market climate this year.

To ensure politicians that the funding will not flow to the United States, "GM proposes to place Opel into a legally separate holding company into which it will transfer about 3.8 billion-dollar-worth of non-cash items," said an article posted on The Economist web site on March 5.

　　FUTURE BLEAK

Merkel will be reluctant to see Opel collapse before the general election in September, as its demise would go down badly with voters, analysts said.

However, its future remains bleak as no tangible progress has been made in efforts to rescue the automobile industry icon.

GM said earlier this month that if no aid was provided, it has to eliminate thousands of jobs in Europe and shut three factories to save costs.

The chancellor will think twice before making any decision, as she risks being accused of acting unfairly towards other firms if Berlin decides to help Opel.

Deputy Economic Minister Dagmar Woehrl showed pessimism about a government bailout, saying it was "highly questionable and unlikely" that the government would inject huge amounts of cash into a company whose fate remains uncertain.

Additional unfavorable news came Friday as European Union officials and member states' ministers agreed in Brussels to coordinate their actions over car industry bailout plans.

"The parties agreed to ensure that no national measures should be taken without prior information and coordination with other involved countries," the European Commission said.

The agency added it would not inject money into any of the GM European brands without getting information from other countries involved, dashing any hope of a fast bailout for Opel.

Special Report:Global Financial Crisis