DETROIT/PARIS (Reuters) - Ford Motor Co F.N reached a tentative deal with the United Auto Workers that would slash cash payments for its retiree health care, while European governments ruled out rescue plans for General Motors Corp's GM.N struggling Opel and Saab units.
The U.S. Treasury also named Steven Rattner, co-founder of private equity firm Quadrangle Group, as an adviser on the restructuring of the troubled auto industry as it weighs additional government aid for GM and Chrysler LLC.
Underlining the depth of the industry's crisis, some Volkswagen AG VOWG.DE plants switched to a short working week on Monday for the first time in 26 years, and auto parts maker Continental AG CONG.DE said it needed 5 billion to 6 billion euros of funding and third-party support.
Ford, the only U.S. automaker which has not arranged government funding to survive the crisis, said the deal with the UAW union gives it the option to settle up to 50 percent of payments into the VEBA health care trust in stock, potentially saving it almost $7 billion in cash.
GM, which is also mandated to convert half of its cash obligations for the Voluntary Employees Beneficiary Association, or VEBA, into equity under the terms of its $13.4 billion government bailout, said on Monday it was still in negotiations with the UAW.
The future of GM’s troubled European operations faced uncertainty, as Germany and Sweden wrangled over providing emergency support for the Opel and Saab units.
Germany said on Monday it would wait for the automaker to present a business plan due on Friday before considering state guarantees.
Sweden’s Industry Minister Maud Olofsson said she would not be prepared to look into loan guarantees for Saab either, unless the carmaker found a private investor to back its business plan.
Governments from the United States, Asia and Europe have been pressured to support the ailing auto industry, with automakers burning cash at an accelerated pace in the face of weak consumer confidence and tight credit.
GM and Chrysler, which have already received $17.4 billion in government loans, asked for another $22 billion last week when they submitted new restructuring plans to U.S. officials.
A U.S. Treasury official told Reuters that extra state funds might be available for GM and Chrysler.
Commerzbank raised doubts about the usefulness of state backing for Opel.
“An increasing number of politicians reject such intervention due to the uncertain long-term viability of Opel on the one hand, and the risk of an unfair competitive advantage on the other,” the bank said in a note published on Monday.
“We believe that it will not be possible to run Opel on a stand-alone
Juergen Michels, euro zone economist at Citigroup in London, said the German government was still “cautiously considering more direct aid” but would be wary of opening the floodgates.
Honda Motor Co Ltd 7267.T said on Monday Chief Executive Officer Takeo Fukui would step down in June, to be replaced by Senior Managing Director Takanobu Ito, a veteran engineer with a deep background in research and development.
Honda shares ended 3.8 percent lower at 2,160 yen.
Toyota Motor Corp 7203.T plans to cut parent-only global automobile production by 20 percent in 2009 to 6.5 million units as demand plunges, the Nikkei business daily said on Monday.
Additional reporting by Brian Rohan, Frank McGurty, David Ljunggren, John Bowker, Jan Schwartz, Chang-Ran Kim, Poornima Gupta; editing by Gerald E. McCormick
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