Fiat has reportedly said it will move production of its best selling Grande Punto model (bottom) to the Eisenach plant in Germany which builds the Vauxhall/Opel Corsa (top) if its bid to take a controlling stake is successful.

The race to take a stake in GM's European Vauxhall/Opel division seems to be turning into a two horse race pitched between two very different bids being submitted by Fiat and Ontario, Canadia-headquartered components supplier Magna International. As GM races towards a U.S. government imposed Thursday deadline to initiate a restructuring framework it is planning to spin off its European operations into a standalone unit which could convince the German government to make 3.3 billion euros of loans available.

German Economy Minister Karl-Theodor zu Guttenberg held discussions with Magna International yesterday as the Canadian firm, which has key operations in Austria, throws its hat into the ring. Following the meeting with the Canadian firm's senior management he said that the plans submitted by Magna and Fiat are very different. Fiat declined to comment on the minister's words.

Opel's unions are firmly opposed to the Fiat bid, fearing that the close similarity in market positioning and overlapping models between the two companies could lead to steep job cuts and factory closures. Fiat has reportedly offered guarantees that it won't close any of Opel's four factories in Germany if its bid to take a controlling stake is successful and has said it will move production of its best selling B-segment Grande Punto model to the Eisenach plant in Germany which builds the Vauxhall/Opel Corsa, according to German daily newspaper Der Spiegel. The Corsa and Grande Punto models share the same platform and engines as they were the product of a now-defunct alliance between GM and Fiat that operated through the first half of this decade. However Opel's union have not been swayed by the offers. "It changes nothing," Opel's works council chairman Klaus Franz said in an interview yesterday with German daily Handlesblatt.

Opel's unions are also holding back on accepting US$1.2 billion of labour cost savings that have been drawn up after negotiations with GM so that they can hold sway over an investor that they don't want, such as Fiat. "We won’t define the contributions of the workers if the concept for Opel’s future isn’t clear,” Armin Schild from the IG Metall union. He blasted German government officials as being "negligent and unprofessional," as they are, he believes, being driven by the greater concern of an autumn national election. “The time pressure by the Economy Ministry is damaging the search, it’s the worst possible time to find a strategic investor. We’re facing the climax of a mega-economic crisis," said Schild. He added that Fiat's promise to keep the German factories open was 'worthless'.

According to Automotive News Europe yesterday, quoting an inside source, GM prefers to find a single investor for its Vauxhall/Opel division and wants to retain a substantial stake. It hopes that the situation will be resolved in the next few weeks, according to the same source. "We continue to aggressively work to secure third party investment," said a GM Europe spokesperson. "Time is of the essence. It is a complex situation with several parties in the mix and this is going to take some time."

While Fiat wants to secure an outright majority shareholding in Vauxhall/Opel, Magna is expected to seek an outside investor to help it grab a controlling stake. A report earlier this week in the Canadian newspaper Globe and Mail said Magna plans to invest in a 20 percent stake itself with Russian oligarch Olg Deripaska and a consortium of Russian banks taking hold of a further 30 percent. The Magna proposals so far hold more favour with Opel's unions than Fiat's initial offer, and the German Foreign Minister and Vice Chancellor, Frank-Walter Steinmeier, said on Monday that he has gained a "positive impression" of the Canadian firm's plans following a meeting with its officials.