Daimler head criticizes Opel help; more US production possible

Nov 12, 2009, 17:32 GMT

New York - The head of Germany's Daimler Thursday strongly criticized Berlin's support for struggling Opel and indicated Daimler could expand its assembly operations in the US.

Dieter Zetsche, who spoke to reporters in New York, said that the restructuring of General Motors' European subsidiary Opel, which has large operations in Germany, was a matter the US car maker had to deal with on its own.

'That should not be the job of the German state,' Zetsche said.

His remarks were the strongest yet by Zetsche, who was more supportive of Berlin's support for Opel when the Canadian parts manufacturer Magna was still a prime bidder for partial ownership of the company.

GM, which emerged from bankruptcy several months ago and is now majority-owned by the US government, meanwhile has decided not to sell any part of Opel but rather to keep it within its own family.

The decision has been resoundly denounced by German Chancellor Angela Merkel, whose government has already extended a bridge loan to GM to keep Opel afloat.

Zetsche complained about worldwide state support for other rivals. He noted that in the past years, an estimated 90 billion euros (133 billion dollars) in government subsidies have flowed into the pockets of domestic car makers.

'We have seen as good as nothing of this. That of course undermines any principle of fair competition,' Zetsche said.

He conceded however that the lack of subsidies reflected the German auto giant's strong market position.

Zetsche said that Daimler will decide at the latest in January about expanding assembly operations abroad for Mercedes C-class vehicles. The possibility of transferring part of that work to US operations would be considered, Zetsche said.

The C-class has been mainly produced in Sindelfingen and Bremen, in Germany, in South Africa and in China.

The US plant in Tuscaloosa, Alabama, currently assembles Mercedes' SUV series and the R-class cars.

The US factory is currently underused. Daimler however would have to invest considerable money to add C-class production. The dollar's fall on currency markets makes expanded production in the US attractive.