BERLIN -- A radical overhaul of the global auto sector loomed Wednesday with U.S., European and Chinese industry players waiting for key decisions on the fate of fallen giants General Motors and Chrysler.
The future of GM's European unit Opel, and Chrysler, fabled but crisis-battered icons of the once-mighty US auto industry, will be on the agenda in German government talks in Berlin and in a courtroom in New York.
Both companies have been victims of plunging demand in a crippling global recession as well as their own failings to favor big, energy-inefficient vehicles that have fallen out of favor with cash-strapped consumers.
German Chancellor Angela Merkel was to gather top politicians and officials in Berlin starting at 1900 GMT to select her government's preferred bidder for GM's struggling subsidiary Opel.
Propped up by US government funds and facing a June 1 deadline to come up with restructuring measures to avoid bankruptcy, GM is anxious to sell off its Opel unit, which employs some 25,000 people in Germany and thousands more across Europe.
While a final decision on who will take over Opel lies with GM and the US government, Germany has a major say because it is offering billions of euros (dollars) in loan guarantees and has most of GM Europe's factories and employees.
The frontrunner for Opel has been Canadian auto parts giant Magna International, backed by Russia's top bank, the state-controlled Sberbank, which would see Russian truck maker GAZ making Opel vehicles in Russia.
Premiers of states where Opel has its main factories have come out clearly in favour of Magna, as have unions, while centre-left members of the German governing coalition are also thought to favour the Canadian solution.
But advisors cited by German business daily Handelsblatt have criticised the Magna offer for not bringing sufficient funds to the table.
For its part, Italian car giant Fiat seeks to combine GM's European and Latin American operations with Chrysler, in which it holds a 20 percent stake, to create the world's second largest automaker after Japan's Toyota.
But the Italian bid has fallen foul of Opel's powerful union bosses as details leaked out of sweeping job cuts, which according to Fiat boss Sergio Marchionne could affect as many as 10,000 jobs across Europe.
Brussels-based RHJ International, a third bidder, owns stakes in auto parts firms including Niles and Asahi in Japan, Belgium's Honsel, as well as Columbia Music Entertainment.
In a last-minute dramatic twist, Berlin confirmed Wednesday that it had received interest in Opel from a Chinese firm, reportedly Beijing Automotive Industry Corporation.
According to Die Welt daily, the Beijing company is seeking less in the way of loan guarantees from Berlin and has pledged not to close any German plants for two years.
The Berlin talks are expected to run late into Wednesday night and the decision could yet be postponed unless the bidders improve their offers, Handelsblatt reported.
Chrysler is also facing its day of judgment Wednesday as a U.S. bankruptcy court judge is to rule on a sale of key assets to give the company a fresh start in a partnership with Fiat.
If Judge Arthur Gonzalez approves the fast-track plan, a new Chrysler could emerge within days, according to President Barack Obama's administration, which is spearheading the plan and providing emergency funding.
A US Treasury court filing last week said that if the plan were approved by Gonzalez, the asset sale would likely be closed by Friday "and the launch of a new Chrysler achieved."
Although the "old" Chrysler may still be subject to a long period of court supervision, the new firm led by Fiat executives would be able to begin operations with Chrysler's plants and workers, but freed of much of its debts and legacy costs.
The third-largest US automaker was forced to file for bankruptcy protection on April 30 and agreed to an alliance with Fiat.
In return for a 20 percent stake, Fiat will allow Chrysler access to its technology to enable the US carmaker to make the smaller, greener cars that are increasingly in demand.
The US Treasury has provided Chrysler with about 9.0 billion dollars in emergency aid, money that Fiat must repay if it wants to take a majority stake in the Detroit firm.
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