European carmakers are still to receive any firm indication from Brussels about whether the sector is to receive a financial rescue package. So far, EU leaders have given no firm assurances carmakers will be bailed out of any trouble and have at times also appeared at loggerheads with each other about the best direction to take.
Whilst some ministers, such as the head of the Eurogroup of eurozone finance ministers, Jean-Claude Juncker, have come out in support of a rescue strategy at the European level, others have been less open to the suggestion.
“If the American government saves Ford, General Motors and Chrysler from bankruptcy with injections of billions of dollars, we cannot just look on and leave European manufacturers all alone,” Junker said in an interview with the German publication Bild.
However, competition commissioner Neelie Kroes was reported to have warned the auto sector that it cannot expect to be treated in a similar fashion to the financial sector. She added, in a piece by Reuters, that countries must not offer automakers unfair incentives.
“You cannot compare the car sector with the financial sector,” she told reporters.
“If your financial system is not working any more, then it is over. That was our incentive to give medicine to its blood circulation,” she added.
A Reuters report also quoted an un-named EU source as saying that any aid would be “temporary” and tied to certain caveats such as environmental performance.
“What will not happen … is a proposal for old-style subsidies,” the EU source said.
The EC is close to sealing a package of financial measures with the intention of stimulating the continent’s economy. Carmakers have been lobbying hard for aid as part of the deal to help them combat falling sales and rising costs.
Last month, the EC in principle backed the possibility of soft loans from the EU’s lending mechanism, the European Investment Bank (EIB).
Meanwhile European Union industry commissioner Guenter Verheugen has signalled his support for the suggestions by German Chancellor Angela Merkel that German authorities would be ready to guarantee funds for Opel.
Verheugen told Deutschlandfunk radio the European Commission would have to examine any possible guarantees, but said: “I’d welcome it if everything was done to prevent an important and traditional car producer in Europe from dropping out of the competition for reasons it’s not responsible for.”
Opel has been hit by the difficulties of its parent company GM and concerns are heightened because GM’s European operations are now heavily loss-making. While attention may be rightly focussed on GM’s troubled North American situation, European operations lost USD1bn in the third quarter. If GM goes bust in the US, that would put loss-making overseas divisions into an immediate cash-flow crisis.
As reported on just-auto, the news that the German government will bail out Opel, if needs be, are not without controversy.
One German economic institute, the Institut für Wirtschaftsforschung Halle (IWH), has said that the German government should buy Opel.
Head of BMW’s Leipzig plant, Jens Köhler, told the German press agency dpa, that guarantees are not the right way to support a company that has become uncompetitive, and that if the imported financial crisis is the problem then all vehicle manufacturers should receive the same level of support.
According to the Financial Times the German government will attach strict conditions to any guarantees so that any money is invested in Germany. The report said that GM owes billions of euros to Opel – funds that are unlikely to be repaid.