Merkel makes last ditch appeal to General Motors over Opel

German Chancellor Angela Merkel made a last-ditch appeal to General Motors to pick Berlin's preferred bidder for its European unit Opel at a crunch board meeting yesterday.

GM's board of directors was due to discuss two offers for Opel - one from Canadian auto parts maker Magna and state Russian lender Sberbank, and one from Brussels-based investment group RHJ International.

GM is believed to favour RHJ but Germany, home to around half of Opel's 50,000 workers, has made a clear preference for Magna - as reiterated by Ms Merkel in an interview published yesterday.

"Right now I am very sceptical about the chances of RHJ. We have to find a solution together with General Motors. Our preference is clearly with Magna," Ms Merkel told the Frankfurter Allgemeine (FAZ) daily.

"Magna has experience making cars and has the better plan," she said.

The FAZ reported on Thursday that Germany was even prepared to offer a €4.5-billion loan to Magna in an attempt to persuade GM to choose the Canadian offer.

Previously, the plan was for Germany to provide the loan together with other European countries where Opel has factories but Berlin's "Opel Task Force" chief told the FAZ that Berlin decided to go it alone, at least for now.

The report caused consternation in Britain, with Business Secretary Peter Mandelson taking a swipe at Ms Merkel saying that GM's decision "should be not be distorted by political considerations in any one country."

Merkel is running for a second term in general elections on September 27.

Both Magna and RHJ want to cut 10,000 jobs at Opel but Ms Merkel and the state governments where Opel has factories prefer Magna because fewer of the cuts would fall in Germany than under RHJ's proposals.

Germany's Economy Minister warned meanwhile that Opel might still go under even if a sale goes through.

"In my view, we will only be able to celebrate the rescue of Opel when it is clear that Opel has really established itself as a competitive company on the world market," Karl-Theodor zu Guttenberg told the Financial Times Deutschland.

This "will definitely not happen in the coming weeks or months," Mr zu Guttenberg said, adding that he "has become very careful with the word rescue, which has been bandied around a bit too liberally."