General Motors' struggling European operations will run out of sufficient money to operate in the second quarter of this year unless governments across Europe provide aid, GM President Fritz Henderson said at the Geneva auto show yesterday.

To avoid that immediate and disastrous shutdown, GM will set its European operations up as an entity in which third parties will hold a considerable stock interest, perhaps more than 50 per cent, he said.

After Swedish carmaker Saab seperated from GM, Opel is now due to become independent from the troubled US auto giant under a restructuring plans. The move will also see Vauxhall, which represents General Motors in the UK, rolled into the newly restructured company and spun off from its US parent.

Last week, following weeks of speculation about Opel's fate,  Forster told a news conference the German carmaker would be split off into a separate unit to be majority owned by its struggling US parent (See: Opel set to break away from GM, Vauxhall also part of the deal)

''It's important that GM Europe stays within General Motors,'' Henderson said, adding that he was ''not in a position to foreclose'' any option, including European governments owning more than half of the new business.

GM is seeking 3.3 billion in euros or about $4.125 billion from the European countries. GM's plan will still allow the company to use its global resources to develop powertrains and vehicle architectures that will be produced and sold around the world, Henderson said.

''GM will be global, we think,'' Henderson said in an interview earlier. ''But we have to be realistic, and the environment today requires us to take a lot of tough measures. We need to focus our brand portfolio. We need to get down to fewer brands that can focus very clearly on the market.''

Hummer, Saturn and Saab may all be surplus to requirements and will play ''a diminished role,'' Henderson said, while Pontiac will be reduced to a niche brand in the US. GM, already relying on $13.4 billion in government loans to survive, said on 17 February it needs as much as $16.6 billion in additional funds to avoid bankruptcy, including $2 billion by the end of this month. (See: GM, Chrysler demand $22 billion more; to slash jobs, production lines)

''We're quite confident that we can execute a product program and build a brand to be successful going forward,'' Henderson said. ''After all, it's about revenue.''

Launching the company's new hybrid-electric Ampera vehicle, which promises low emissions, GM Europe head Carl-Peter Forster said the company was hoping for more government intervention around Europe to stimulate demand. "In Germany, one of our core markets, governmental intervention has led to additional sales, a factor which is helping to ease the burden of short working in some of our manufacturing plants," he said.

The German government has introduced a sales incentive for buyers with aging cars allowing a substantial discount on a new one. German new car sales jumped by 22 per cent in February from the same month a year earlier, mainly owing to the bonus.

GM Europe's restructuring plan, which it has submitted to various governments considering aid, includes a 30-per cent reduction in production capacity - the equivalent of closing three assembly plants, Forster said. The plan will reduce GM Europe's costs by $1.2 billion a year and should return it to profit by 2011, Forster said, adding that GM Europe made profits in 2006 and 2007.

''Europe is in a deep recession,'' Forster said. ''The overall market has collapsed by about 30 per cent. Our plan to the German government is part of the global GM viability plan,'' which includes billions of dollars in aid and significant oversight by the US government.

German politicians have been adamant that no money they provide go to GM's North American operations, a condition Forster said can easily be met. ''You can expect us to set up'' the European business entity ''to assure this,'' he asserted. ''This concern can be put to bed immediately.'' (See: No hasty decision on Opel, says minister)

Some outside investors have shown interest in acquiring GM's Swedish Saab unit, Forster said, but none is willing to invest unless the Swedish government provides loans to help Saab develop key upcoming vehicles. GM is providing technical support to keep those vehicles on track, but will not give Saab money for the heavy investment its factories will require to produce them. (See: Swedish carmaker Saab looking to separate from parent GM, files for bankruptcy)

''Saab is in reorganisation,'' Henderson said. ''If it's not able to reorganise it goes into bankruptcy.''