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General Motors Corp.'s (GM) European division Thursday posted a $1.9 billion fourth-quarter loss and sharply lower production, as talks over the need for state aid and a possible spin-off of its Opel unit intensified in Germany.

The European division - which includes Opel in Germany, Vauxhall in the U.K. and Saab in Sweden - contributed to a $9.6 billion net loss at the parent company, as sinking sales outweighed the positive impact of U.S. government aid.

GM Europe's loss widened to $1.9 billion, from $445 million a year earlier, with the auto maker blaming lower volumes across the region, an unfavorable model mix which saw it lose market share, as well as unfavorable foreign exchange and commodity hedging.

Fourth-quarter revenue in Europe fell to $6.4 billion, from $10.7 billion in the same period in 2007, as its market share dropped to 9.1% from 9.2% in a sharply contracting market.

GM's production in the quarter fell across all regions, but the contraction in Europe was most marked. Production was just 214,000 vehicles, compared with 457,000 vehicles a year earlier as it cut shifts and closed plants for long periods.

GM Europe reported a loss of $2.8 billion for the whole of 2008, compared with a loss of $524 million in 2007. Production was 1.55 million vehicles, down from 1.83 million.

The news comes as Germany's economics minister prepares to meet with the heads of the German states on Saturday to discuss possible state aid for Opel, GM's largest European unit.

Earlier Thursday, Karl-Theodor zu Guttenberg told reporters that Saturday's meeting with governors of states that have Opel plants will follow a Friday meeting of the Opel board of directors, who will discuss possible restructuring models and Opel's future ties to GM.

Last week, GM Europe said that market conditions have deteriorated dramatically since it asked for German aid for Opel in November, suggesting it may need significantly higher guarantees than anticipated at the time.

Opel needs at least EUR3.3 billion in capital to survive and become less dependent on GM, Armin Schild, a member of Opel's board, said last week.

GM has indicated that it is open to selling a stake in Opel, and German politicians are under pressure from workers to bailout the car maker to help save 25,000 jobs, a number that more than doubles when including parts suppliers and other Opel-linked companies. Thousands of Opel workers staged street demonstrations Thursday to keep up political pressure for a state bailout, and they were joined by Vauxhall and Saab workers.

But German policy makers so far have been divided over the state taking a stake in Opel, with Chancellor Angela Merkel saying that possible liquidity guarantees would be the right tool the help companies like Opel.

Saab's own management has already put the brand into Sweden's equivalent of Chapter 11 and pledged to emerge as an independent Swedish car maker separate from GM.

-By Christoph Rauwald, Dow Jones Newswires; +49 69 29 725 512; christoph.rauwald@dowjones.com

(Beate Preuschoff, Andrea Thomas and Roman Kessler contributed to this article.)