General Motors Co. said its European operations lost $500 million before interest and taxes in the first quarter, an improvement of $300 million from the fourth quarter of 2009.
After GM sold its Swedish Saab unit to Dutch luxury sports car maker Spyker in January, GM's European operations now include only Opel and its British sister brand Vauxhall, which have a Europe market share of just under 7 percent.
In the first quarter GM reduced its European loss with help from sales of the new Astra compact hatchback, material cost reductions and because it no longer had to bear Saab's losses, Opel CEO Nick Reilly said in a letter to employees.
GM's finance chief Chris Liddell said it was possible Opel would break even next year but faced pressure in Europe from a slowdown in auto sales under way even before the recent debt crisis.
"Of all the areas of the world, that's still the most challenging and, with some of the things that are going on in Greece, we're not out of the woods yet." Liddell said during a conference call on Monday.
Opel suffered severely when the economic crisis hit new-car sales two years ago. Last week, Opel Deputy Chairman Klaus Franz said PricewaterhouseCoopers had certified that Opel was profitable until September 2008.
GM decided to keep Opel last November instead of selling the unit to Canadian auto parts supplier Magna International Inc. and its Russian partners.
The U.S. carmaker is now is seeking about 1.8 billion euros ($2.2 billion) in state aid from European governments to restructure the unit to bring it back into profit by 2012.
GM plans to shed 8,000 jobs in Europe and cut capacity in the region by a fifth. The automaker is seeking the lion's share of loan guarantees toward a 3.7 billion euro restructuring from Germany, where Opel and half of the carmaker's 48,000 European workers are based.
Reilly expects a final answer from Berlin by the end of this month. He said last Friday that generous contributions from other main Opel countries -- likely Spain and the UK -- meant that GM might need less than 1.3 billion euros from Germany.
Opel's new-car sales in Europe fell 3.5 percent to 340,888 in the first four months, compared with the year before, according to ACEA, the European carmakers association. Its market share declined to 6.9 percent from 7.5 percent.
Jesse Snyder contributed to this report