"We have 60 days in which to talk about how a future concept should look," Merkel said on Tuesday, March 31, referring to the two month restructuring deadline US President Barack Obama set General Motors one day earlier.

Merkel made her comments during a speech to some 3,000 Opel workers at the company's main plant in Ruesselsheim, near Frankfurt.

She said the German government and authorities from states with major Opel factories would join forces with bankers and Opel managers to "defend German interests" in talks with GM and US officials.

"We must lay the foundation for the creation of a European Opel," Merkel said, adding that she would work to ensure the carmaker was made economically viable by 2012.

She added that Opel would be an efficient and modern organization where "employees can say they're building German's future and leading the world."

Opel managers have said they need some 3.3 billion euros ($4.38 billion) to restructure their operations and become independent of General Motors. But the German government has so far refused to provide the funds because it is concerned public money may be transferred across the Atlantic to help plug holes in GM's accounts

Political maneuvering

With national elections due in September, Merkel's grand coalition government remains split over how far the state should go in saving the 110-year-old German carmaker, which has been a GM subsidiary since 1929.

Merkel's Christian Democratic Union would prefer a private investor to rescue Opel, while her junior coalition partners from the Social Democratic Party want the state to make direct investments aimed at saving the company's 26,000-strong workforce.

German Foreign Minister Frank-Walter Steinmeier, the Social Democrat who will challenge Merkel for the chancellorship, laid out a 10-point plan on Monday and has said the German government must take action immediately.

Steinmeier proposed that the federal and state governments join forces with a consortium of Opel dealers and managers to purchase a holding of 50 percent plus one share, leaving GM with the minority stake. He said the move would give Opel at least three months to reorganize and find a private investor.

But German Economics Minister Karl-Theodor zu Guttenberg rejected the idea of buying directly into Opel, arguing that Berlin should limit itself to providing credit guarantees to attract investors.

Union makes concessions

Germany's giant metalworkers union IG Metall, meanwhile, has renewed calls for Merkel to throw her full support behind efforts aimed at saving Opel from bankruptcy.

IG Metal boss Detlef Wetzel questioned why Merkel would provide billions of euros in a financial bail-out to banks but deny requests for aid from the "real economy."

Meanwhile, the union's regional director in Frankfurt, Armin Schild, has indicated that Opel workers are prepared to make significant concessions to keep the company afloat and prevent job cuts.

He said possible changes could range from cutting working hours without compensatory wage increases to the negotiation of new collective agreements between employees and management.