German Chancellor Angela Merkel said on Saturday a decision on state aid for Opel, a struggling unit of U.S. carmaker General Motors , depended on the firm's long-term outlook and on the readiness of banks to help.

A day after GM Europe unveiled a plan to spin off Opel to try to avert job cuts and plant closures, Germany's Economy Minister started consultations with premiers of the states with Opel plants and said he still needed answers to many questions.

GM Europe has said it needs 3.3 billion euros in aid from European governments and will present its plan in detail to the German government on Monday.

Without a careful examination, aid is not possible, Merkel said at an event in Kiel. (We must first establish) if there is a positive outlook for the company and whether banks will get involved, she said.

Merkel has said she could be open to offering financing guarantees, depending on her assessment of the revamp plan.

Less than seven months before an election and facing the deepest recession since World War Two in Europe's biggest economy, Merkel is keen to save as many of the roughly 25,000 jobs at Opel's four German plants as possible.

German media have reported 8,000 to 11,000 jobs are at risk.

The state premiers of Hesse and North Rhine-Westphalia, which together rely on Opel for about 21,000 jobs plus thousands more at suppliers, said they were ready to help if they could.

The central idea of the overhaul is to split off Opel, including the UK's Vauxhall, into a unit which would be majority owned by its U.S. parent. Outside investors would take a stake of more than a quarter.

Merkel is determined that no state aid could end up flowing back to GM, itself seeking a federal bailout to stay afloat.


After his talks, Economy Minister Karl-Theodor zu Guttenberg told reporters there were many open questions.

We are looking for clarification on, for example, the question of what the independence that the company has proposed really means, he said, adding it was unclear how integrated Opel would be with GM and what would happen to patents.

Can we be sure that any aid we make available would not suddenly be going to the United States? he said.

Citing government sources, the Leipziger Volkszeitung daily said Germany may be ready to provide up to 5 billion euros of aid to help free Opel from GM if an improved plan was presented.

The four federal states where Opel has plants should shoulder a fifth of such aid taking the form of guarantees, loans or even temporary stakes in the firm, the paper said.

Like other carmakers around the world, Opel is trying to cope with a sharp drop in demand as consumers rein in spending due to the global financial crisis and sharp economic downturn.

Rival carmaker Volkswagen baulked at the idea of government aid for Opel.

The state should stay away from it, Volkswagen CEO Martin Winterkorn told German weekly Der Spiegel. He said it would be legitimate if the state were to give loan guarantees to a company but that should only be a temporary solution.

But Bernhard Mattes, head of Ford's German operations, said the industry was worried about Opel's struggle. We have to keep stability in the industry, he told Focus weekly.

(Additional reporting by Marilyn Gerlach in Frankfurt and Matthias Inverardi in Duesseldorf; Editing by Ruth Pitchford)