GM Mulls More Opel Funding

According to these people, who spoke in recent days, GM is open to increasing its share of the funding needed to turn around Adam Opel GmbH, the German-based unit that makes up the bulk of its operations in Europe. The company, they said, believes that step will be necessary to get aid from Germany, where it seeks the largest chunk in European state aid, worth €1.5 billion

GM Europe spokesman Stefan Weinmann declined to comment.

GM's turnaround plan for Opel has faced political resistance in Germany, and several German politicians have called for a higher financial contribution from Opel's parent firm. Apart from Germany, GM is seeking state aid from the U.K., Spain, Poland and Austria.

The big auto maker last year went through a bankruptcy reorganization financed by the U.S. government, which now owns 60% of the company. Now GM has access to billions of dollars in cash that it can use to restructure its operations, including those overseas.

One person familiar with the matter said GM does not believe it would encounter resistance to using money from the U.S. government to fund part of the Opel turnaround because the European unit is seen by GM's board as a critical part of its global strategy. Opel develops many of the small cars GM makes and sells around the world, and Europe remains a large and important market for GM.

A year ago, as GM was sliding toward bankruptcy, the company began making plans to sell a majority stake in Opel, mainly because it had no cash at that time to put into the unit. It nearly sealed a deal to give up control of Opel to a group led by auto supplier Magna International Inc., but GM's new board directed its management to back out of the deal at the last minute.

One of the board members who pushed for GM to keep Opel is Chairman Edward E. Whitacre, Jr. After GM announced it would keep Opel, Mr. Whitacre also became chief executive, taking over for Frederick Henderson, who resigned.