Merkel Meets GM's Opel Managers Next Week Over Crisis

By Jann Bettinga and Brian Parkin

Nov. 15 (Bloomberg) -- German Chancellor Angela Merkel will hold crisis talks next week with executives of General Motors Corp.'s Opel unit, which is asking Germany for loan guarantees as its U.S. parent struggles to survive.

Merkel invited the heads of Opel in Germany and Europe as well as the division's works council chief for talks on Nov. 17 in Berlin, the government said today in an e-mailed statement. Focus magazine has said Opel may get 2 billion euros ($2.5 billion) worth of government guarantees.

Opel is asking for assistance as its parent company seeks a U.S. government bailout to avert bankruptcy. The German unit yesterday said it wants loan guarantees in case it's affected by the parent's crisis and ``GM's financial situation were to intensify.'' Opel approached the federal government for help as well as the states of Hesse, North Rhine-Westphalia, Rhineland- Palatinate and Thuringia, where the carmaker has plants.

``It's important that we have a good discussion on the right steps to take and that we try to support the auto industry,'' Merkel said in the statement.

She and Finance Minister Peer Steinbrueck are in Washington for talks with leaders of the Group of 20 industrial nations on the financial crisis. Steinbrueck and Economy Minister Michael Glos will hold talks about Opel's situation with the federal states on Nov. 18, Merkel said in the statement.

Preventive Measure

Opel spokeswoman Gudrun Langer couldn't be reached for comment. The carmaker previously has decline to comment on the amount it has sought. Germany's federal government may shoulder 1 billion euros worth of loan guarantees and the four states another billion, Focus said in a summary of a report to be published Nov. 17.

Separately, Germany's Bild am Sonntag said GM will give Opel 1 billion euros worth of assets it holds in Europe, which the unit could use as guarantees for loans. Germany's federal and state governments would guarantee at least 1 billion euros, the newspaper said in a summary of a report to be published tomorrow, citing unidentified people in the government.

The unit isn't facing a liquidity problem, Opel's works council leader, Klaus Franz, said today in a statement. The guarantees would be a ``preventive measure'' in the event that GM's problems in the U.S. intensify, he said.

Drop in Sales

Opel, which targets mainly low-income buyers, has been among automakers hardest hit by the credit crunch. The brand's European sales have fallen 12 percent this year, more than twice the industry-wide drop, according to the European Automobile Manufacturers' Association.

In April, Detroit-based GM vowed to invest 9 billion euros in Opel through 2012 as part of an effort to introduce 20 models within four years.

GM and fellow U.S. carmakers Ford Motor Co. and Chrysler LLC would receive $25 billion in loans out of a $700 billion bailout package approved earlier this year under legislation that Representative Barney Frank of Massachusetts and Senator Carl Levin of Michigan are writing. President George W. Bush's administration opposes using those funds for the auto companies.

Opel, known as Vauxhall in the U.K., said yesterday the government aid would cover developing vehicles and equipment for its German factories and that it would ``under no circumstances'' be used outside Europe.

To contact the reporter on this story: Brian Parkin in Washington on bparkin@bloomberg.net; Jann Bettinga in Frankfurt at jbettinga@bloomberg.net