The turnaround at General Motors from bankruptcy to profitability in just 12 months is undermining the efforts of its loss-making German unit Opel to win state aid, leaving GM to foot the bill.
Almost a year to the day since GM sought protection from creditors, the steering committee of Germany's rescue fund will meet on Tuesday to recommend whether taxpayers should backstop loans to Opel worth about 1.3 billion euros ($1.6 billion) that would finance some 8,300 upcoming job cuts.
GM only wants to contribute half of the 3.7 billion euros Opel requires in total funding, saying that since Opel is a European carmaker it is a problem for European taxpayers.
But Detroit is not likely to get its way with the business environment looking brighter and political support waning.
"I see absolutely no reason for a state guarantee. It's completely inappropriate, and I don't expect they will get it," said Metzler Bank auto analyst Juergen Pieper.
Already in the doghouse after its clumsy and erratic handling of Opel last year -- first looking to summarily rid itself of its cash-burning subsidiary only to unilaterally end months later a Berlin-brokered sale -- GM's sudden good fortune makes it that much easier for Germany to reject its request.
GM generated $1 billion in free cash alone in the first quarter, its first three-month period in the black since 2007, and thanks to the Obama administration it has a liquidity cushion of nearly $36 billion so there is little evidence to suggest it cannot fund its fully-owned German unit if need be.
"Aid would only have been justified right in the middle of the crisis, not any more. Why does the state have to provide guarantees, why can't its parent?" asks Helmut Becker, head of the Institute for Economic Analysis and Communication in Munich.
"If I were a politician I'd feel like I was being conned. Every three months Opel swears it only has enough money to last the next six weeks and then it's finished -- and yet still they are here."
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