Reports that General Motors will sell Opel dismissed as 'nonsense'

German press reports that General Motors Co. is putting its European unit Opel/Vauxhall up for sale were dismissed as speculation by the division and as "nonsense" by a German state with an Opel factory.

The magazines Auto Bild and Spiegel reported that GM is considering putting Opel up for sale as management is losing confidence that its European arm will return to profitability. The reports said possible buyers could be Chinese carmakers or Germany's Volkswagen.

GM declined to comment. Opel CEO Karl-Friedrich Stracke called the reports speculation in an email sent to employees and appealed to staff not to be influenced by press rumors.

The government of Germany's state of Thuringia said the reports are untrue. "According to our information that is nonsense," a spokesman said. Thuringia is home to an Opel factory in Eisenach.

An Opel spokesman told Automotive News Europe: "It is speculation and we don't comment on speculation."

The works council of Opel demanded a denial from GM. The U.S. parent had so far "kept Opel as it might otherwise lose technology and for other good reasons," said Klaus Franz, head of the works council.

The magazines said GM believes it no longer needs Opel for technologies such as small cars and low emission engines, which could instead be sourced from its Daewoo unit in Korea.

If Opel were put up for sale, Volkswagen, which has almost 20 billion euros ($29.3 billion) available to spend, would try to buy it to prevent it from falling into the hands of a Chinese competitor, Spiegel said.

GM dropped plans to spin off Opel in 2009 after months of negotiations to sell it, and embarked on a drastic restructuring to get the unit, which lost $1.6 billion last year, back on track.

GM CEO Dan Akerson said in March that Opel was still losing money despite selling more cars.

Stracke said in his email to employees that Opel is making very good progress. "Incoming orders are very good right now. For the factories in Ellesmere Port and Gliwice we have already added eight shifts to meet demand for the Astra," he said.

The magazine reports come less than three months after Stracke was appointed as CEO of Opel, replacing Nick Reilly, who had led Opel when it was on the auction block.

At the time of his appointment, analysts said Stracke faced an uphill battle as the mature Western European market was bringing up the rear in the global auto industry's slow march to recovery.

Volkswagen declined to comment on the reports.

By Paul McVeigh and David Jolley- Automotive News