Germany dashed Opel's hopes of receiving state aid on Monday, at least initially, in a ruling the carmaker believes was motivated by sovereign debt crisis rather than anger over perceived sins committed by its Detroit parent.
General Motors GM.UL may now be forced to contribute more than the planned 1.9 billion euros ($2.55 billion) of U.S. taxpayer funding to keep Opel afloat as the loss-making European brand slashes 20 percent of its capacity and rejuvenates the bulk of its model range through the end of 2014.
"GM is naturally very disappointed with this decision as is Opel after such a very long process. We've spent a long time answering many, many hundreds of questions being reviewed by many, many different committees," Opel Chief Executive Nick Reilly told reporters on Wednesday
"I don't particularly understand the reasons why," he continued, adding he would now discuss with parent GM about possible funding options.
The decision to reject Opel's request for Germany to backstop 1.1 billion euros ($1.5 billion) of its borrowing revealed further cracks in Chancellor Angela Merkel's porous and largely unpopular center-right coalition with the liberal Free Democrats (FDP).
Some 48 hours after Berlin unveiled an 11.2 billion euro fiscal savings program, German Economics Minister Rainer Bruederle of the junior partner FDP took personal responsibility after a Monday stalemate within the German rescue fund, rejecting state guarantees for private-sector loans to Opel that he had opposed ever since taking office. [ID:nLDE6561E9]
Merkel, known as a pragmatic middle-of-the road conservative, said the "last word had not been spoken" over Opel and that she would "do everything" she could to ensure support to Opel's 25,000-strong German workforce.
Nonetheless, this decision would strengthen Bruederle's credentials as a politician who fights against state intervention while Merkel would preserve her reputation as the protective mother of the nation.
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