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General Motors' Plan for Opel 'Fuzzy'

(Bloomberg) -- General Motors Co.'s plan to revitalize the Opel division needs "intense examination" before Germany agrees to provide aid, according to a government report to lawmakers.

The Detroit carmaker's business plan is "fuzzy" on how to confine government assistance to European operations, according to a study delivered to lawmakers on Feb. 19. GM is seeking 2.7 billion euros ($3.7 billion) in state loans or credit guarantees from European governments after it canceled a proposed sale of Opel in order to keep the division.

GM has spent 600 million euros reorganizing Opel and its U.K. sister brand Vauxhall. Germany, asked to pledge 1.5 billion euros toward a 3.3 billion-euro revamp, wants GM to increase its own share to at least 1.65 billion euros before considering aid, a government official involved in the negotiations said.

"GM's own contribution is way too low and needs to be clearly increased," Thomas Schaefer, deputy finance minister of Opel's home state of Hesse, where the carmaker employs 15,000 workers, said in an interview.

Stefan Weinmann, a spokesman for GM's Opel division, couldn't be reached for comment. The government report says its conclusions are based on an "initial scrutiny" of GM's plans.

Contribution Clarity

Possible contributions by other countries are unclear, according to the report, which notes that Spain, Poland and Austria are only expected to provide "project finance," while Germany and Britain may extend bank loans with credit guaranteed by the countries, it said.

Opel intends to eliminate 8,354 of its 48,000 jobs across Europe, with about 4,000 terminations in Germany, where GM employs about 25,000 people, according to the report. GM is also seeking 265 million euros a year in savings from unions, which are resisting plant closures and seeking a stake in the Ruesselsheim, Germany-based car manufacturer.

PricewaterhouseCoopers LLP, commissioned by Germany to examine GM's plan, will take "some time" to make an assessment, the report said.

Talks between GM and the German government should be concluded before the May 9 election in Germany's most populous state of North Rhine-Westphalia, where Opel employs about 5,300 workers, Matthias Machnig, economy minister of Thuringia, said on Feb. 9.

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