After months of wrangling, the bid process for struggling German car maker is still wide open, according to Economics Minister Karl-Theodor zu Guttenberg who refused to confirm that frontrunner Magna still had the coalition government's full backing.

"There are still lots of question marks; for example, the bidders have to ensure that the new Opel company can start with a strong capital base," Guttenberg told the Frankfurter Allgemeine Sonntagszeitung.

"That means that the bidders have to be ready to take on more risk themselves. Otherwise the EU Commission will not accept the rescue," the minister told the paper in an interview.

GM favorites are Canadian auto parts maker Magna and the Belgian investor RHJ International but China's BAIC is reportedly poised to make a last-ditch bid for the European unit, which also includes the UK's Vauxhall plants.

Business performance

Opel has accrued losses totaling 1.861 billion euros (2647 billion US dollars) from 2003 - 200, according to a report in Financial Times Deutschland newspaper. In the last ten years the Ruesselsheim-based Adam Opel company has recorded losses each year except for 2001 and 2002. During that period Opel's market share, based on government figures, plunged to 8.4 percent in 2008, compared to 13.7 percent in 1999.

Car sales in the same period have been halved to around 187,000, down from 522,000 in 1999. In the first six months of 2009, Opel sold 187,000 cars, which included 51,652 from the government-funded "cash-for-clunkers" scheme, a reward program for customers who trade in their old cars for new, environmentally friendly models. This has resulted in a 26 percent increase in Europe's biggest car market in the first six months of this year.

But underscoring the crisis that engulfed the car industry over the last 12 months as a result of the global economic downturn, the Brussels-based auto industry association ACEA said total new European car registrations dropped 11 per cent during the first half of 2009 compared to the same period in 2008. Opel saw its performance deteriorate by almost 10 percent compared to May 2008.

Election issue

Against this backdrop, Chancellor Angela Merkel's coalition government has said it could offer Opel 1.5 billion euros in the form of loan guarantees, including 500 million from the regional government of Hesse. But with a general election only ten weeks away, Merkel has been criticized by the SPD's candidate for the chancellorship, Frank-Walter Steinmeier, for describing the troubled automaker as "not systemically relevant".

Berlin agreed in late May to throw its weight behind a bid by Canadian-Austrian auto parts maker Magna, which emerged as a frontrunner in the bid to win a majority stake in Opel. Magna teamed up with state-owned Russian bank Sberbank and automaker GAZ.

But the deal is far from done and dusted. Brussels-based finance investor RHJ International has found favor with the Berlin government. It has offered 275 million euros for a majority stake and hopes to pip Magna at the winning post with its "Project Beam" offer.

RHJ's chief executive Leonhard Fischer said it would cut a maximum of some 10,000 jobs at GM's Opel unit if it was successful in its bid.

"We will have to cut just under 10,000 jobs across Europe - no more", said Fischer in an interview with the Bild mass circulation daily.

RHJ plans to shut down a plant in Antwerp, Belgium in 2010 and streamline operations at the car maker's four German plants. No plant closures are planned in Germany under RHJ's plans.

The Belgian investor will not pay out any dividends to shareholders before 2014 and has projected net sales to increase to 23.6 billion by 2014 with profits up to 2.5 billion by the same date.

Trade union leaders have signaled their support for the Magna deal, with Opel union leader Klaus Franz criticizing the RHJ plan as "a riddle wrapped up in an enigma". He said it was unclear how the Belgian-based investor planned to finance the takeover.

"What we need is a proper industrial partner with an interest in long-term business and the future of the company," Franz told Reuters news agency.

Guttenberg told journalists that it was important to create a competitive company that could tackle consolidation measures. He rejected a buyback option by Opel's American parent.

"That is not compatible with our ideas and should not happen," said the German minister.

Chinese suitor

Beijing Automotive (BAIC) is also pursuing Opel, but Merkel's spokesman said on Friday talks with the Chinese group were not as advanced.

BAIC wants to invest 660 million euros for a 51 percent stake in Opel and plans total investments of 1.59 billion euros by 2015 to build and sell Opel vehicles in China. The state-owned Chinese car maker would cut 3,000 jobs in Germany.

But Roland Koch, the regional premier of Hesse, told the Hamburger Abendblatt newspaper that Opel cannot be run by a company that "produces 12,000 cars a year and does not even have the backing of the Chinese government".

Meanwhile German car dealers have signalled their readiness to buy a stake in Opel within the framework of the European Dealers' Association. The chairman of the German Opel Dealers Association, Kurt Kroeger, told the Rheinische Post newspaper that it offered to invest 350-500 million euros, equivalent to a 10 percent stake in Opel, by contributing 150 euros for every car sold. In return the dealership association called for a bigger say in Opel's production policy.

nrt/Reuters/AFP/dpa

Editor: Neil King