Schaeffler and Continental representatives met with national and regional government representatives yesterday to discuss the possibility of state aid.

State finance minister, Peer Steinbrück, a member of the socialist SPD party, has spoken out against any support for Schaeffler.

"It is not the state's job to get involved when a company has not sufficiently thought through a business decision," he told a Berlin newspaper.

Economy minister Michael Glos a member of the CDU party, believes differently, however, and thinks the state should take some responsibility. Following the meeting the next step is for Schaeffler and Continental to talk to their bankers and come up with a sustainable financial plan, according to the economics ministry.

Both companies are heavily indebted with combined liability of EUR22bn, following Continental's acquisition of Siemens' automotive component unit, VDO, and Schaeffler's purchase of its Continental stake.

Schaeffler has only recently completed the purchase of 49% of Continental shares and needs additional securities for its credit lines. It is asking for national and state government guarantees of up to EUR4bn. The companies are headquartered in Bavaria and Lower Saxony, and met yesterday with the heads of both of those states, as well as national government ministers.

There have been rumours that Schaeffler asked if the state could take a stake in Continental, although that has since been denied.