GM Europe 'could run out of cash'

12:39, 04 March 2009
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It could help...

The European divisions of General Motors (GM) could collapse within weeks without European governments` help, GM`s top executive has warned, according to BBC.

Chief operating officer Fritz Henderson said governments should step in immediately to ensure GM Europe does not run out of money by April or May.

It could help prevent some 300,000 jobs from being lost, Mr Henderson said.

He wants governments to put up 3.3bn euros ($4.2bn, £2.9bn) to finance the separation of Opel and Vauxhall.

Mr Henderson said during the Geneva motor show that Opel and Vauxhall should become a separate division that can then be opened up for investment.

He also urged Opel, Vauxhall and Saab employees "to make shared sacrifices" to save their jobs.

Reluctance

The news followed GM Europe`s chief executive Carl-Peter Forster`s arrival in Geneva on Monday, on an budget airline flight from Berlin where he had been in talks with the German government about state aid.

Following that meeting, German Finance Minister Peer Steinbrueck said he had yet to be convinced that GM Europe`s Opel had a "sustainable future", a precondition for state aid.

The Swedish and UK governments have been similarly reluctant to offer direct assistance to save Saab and Vauxhall.

Mr Henderson, with Tuesday`s statement, is clearly trying to force their hands, insisting that Saab will go into bankruptcy if its restructuring efforts do not succeed, and telling the UK government that it cannot expect the German government to do it on its own.

There are now growing fears that political processes aimed at helping GM will be too slow to bring forth assistance before it is too late.

Pride of place

Paradoxically, GM`s problems come at a time when its model line-up is receiving widespread praise.

On GM`s stand in Geneva, the Insignia, which was voted Car of the Year 2009, took pride of place.

And the unveiling of the Ampera, the European version of GM`s Volt, an electric car that is charged either via a socket or by a range-extending petrol engine, attracted a huge crowd of journalists during press day at the show. The model is set to push Opel and Vauxhall into pole position for such hybrid vehicles in Europe.

GM says a hived off European division would still be able to work closely with its US parent company, which itself is being assisted by the US government, in particular with regards to technology sharing.

During the October to December quarter 2008, GM Europe more than halved production to a little more than 200,000 cars and there are now real fears about the future of its plants in Ellesmere Port in the UK, Antwerp in Belgium, and Bochum in Germany, in addition to its Saab factory at Trollhaettan.

 

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