German Chancellor Angela Merkel said on Monday that her government will make the decision on whether and how to help General Motors' German unit Opel through its financial problems before Christmas.
Speaking after an emergency talks with Opel representatives in Berlin, Merkel said that it is still open whether it is necessary to provide the government assistance.
"I think the government will do everything that is necessary to help the company but on the other hand, it will of course respect the consequences with regard to dealing with other companies," government spokesman Ulrich Wilhelm said.
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| German Chancellor Angela Merkel with Opel Flextreme | ||
Opel officials said that the company is seeking more than 1 billion euros (about 1.25 billion U.S. dollars) of loan guarantees from the German government to prepare for the worst scenario that it found it difficult to get liquidity from its troubled parent company in the United States.
German officials has also said that they want to make sure any aid provided to Opel is not transferred to its U.S. parent.
Due to a massive decline in orders, Opel as well as German carmakers Daimler and BMW have announced plans to temporarily halt production in order to save costs.
Following Merkel's talks with Opel officials on Monday, German Foreign Minister Frank-Walter Steinmeier, Merkel's Social Democratic challenger in next year's general election, will hold talks with car worker representatives in the evening.
On Tuesday, officials from the Finance Ministry, Economy Ministry and German states will hold talks to discuss the auto sector, where demand has been hit badly by the financial crisis.
Troubles in the car sector are a major worry in Germany, Europe's largest economy, where close to one in five workers is employed, directly or indirectly, in the sector.
The German government has taken the matter seriously partly because that it might lead to heavy job losses. Opel employs more than 25,000 in its German plants in Ruesselsheim, Bochum, Kaiserslautern and Eisenach.
German Finance Minister Peer Steinbrueck and Economy Minister Michael Glos both have voiced reservation about extending a loan guarantee to Opel, fearing that other carmakers would also turn to the government for help.
Other German carmakers are also suffering. Daimler said last month it would shut two big German plants for a month due to a sharp drop in demand.
Auto parts maker Robert Bosch GmbH said earlier this month it would shorten the working week for 3,500 workers at a plant in Germany for six months.
Shares in Volkswagen fell around 10 percent on Monday after the carmaker reported a 5.1 percent drop in group vehicle sales in October.
Separately, Renault's chief operating officer Patrick Pelata told Le Parisien newspaper he expects the European automobile market to fall by around 20 percent in 2009.
