With the German government set to hold a key meeting on Opel's future this evening, Fiat CEO Sergio Marchionne has said that he has reduced his demands for state aid in the event of a successful takeover by 1 billions euros to 6 billion euros. This follows similar negotiations between the German government and Magna International which has seen the Austro-Canadian company reduce its state aid objectives as well as lessening its impact on job losses in Germany.

"We changed the request for state guarantees from 7 billion to 6 billion (US$8.4 billion). That is simply because we dropped the amount of cash needed on the balance sheet," Marchionne told assembled reporters on leaving a meeting with German Foreign Minister Frank-Walter Steinmeier yesterday. With GM approaching a June 1 deadline to restructure, or like Chrysler face the Chapter 11 process, the German government is anxious to sort out Opel's future as soon as possible. With GM's bondholders rejecting an offer by today's Obama Administration-imposed deadline to turn their loans into a 10 percent equity stake, the spectre of Chapter 11 for the American carmaker becomes ever more likely.

In a Bloomberg TV interview after the meeting with Chancellor Angela Merkel yesterday, Marchionne said his discussions were "constructive" but admitted that "it's a lottery right now." Marchionne's ambitious plan is to create a new global carmaking giant that will fuse GM Europe's Opel/Vauxhall division with Fiat's own carmaking activities and Fiat's 20 percent stake in Chrysler. Marchionne is also keen to include GM's Latin American and South African operations in the new entity. However he plans to offer no cash and instead will rely entirely on government loans to build this new force. Under Fiat's controversial leaked "Project Phoenix" plan, the combined entity would target revenues of 58 billion euros by the end of next year, this growing to 65 billion euros by 2014, and achieving 1.4 billion euros a year in cost savings from 2015 onwards.

Job losses at Opel in Germany is a highly sensitive issue in the negotiations with the national politicians facing a general election due later this year. Fiat initially stated in the leaked documents that up to 18,000 jobs could go across GM Europe's factories, but hastily revised this figure down to 10,000 and said as few as 2,000 could come from Germany. However Marchionne hasn't won the trust of German politicians or Opel's union bosses, and Magna, which is expected to shed around 9,000 jobs, is now seen as the favourite. "Magna is clearly in pole position,” Klaus Franz, the head of Opel's supervisory board said last night. Yesterday Magna and the third bidder, private equity house RHJ International, spent time at Opel's Rüsselsheim headquarters discussing their plans for job losses at Opel in Germany. A fourth surprise bidder has also recently emerged in the shape of Chinese carmaker, BAIC. The influential Social Democratic Party has come out firmly on Magna's side and Peter Struck, its leader in parliament told reporters last night that: "The Chancellor has to examine the offer by Magna very closely because in my opinion it's the most realistic, the best offer."