German State Secretary Jochen Homann said Friday that Magna International Inc. (MGA) is the front runner to take over General Motors Corp.'s (GM) Adam Opel GmbH unit, but noted that the U.S. parent company still has to make the final decision on a deal.

"GM is negotiating with the bidders, not the (German) government," Homann added, at an industry conference in Munich.

Homann said a viable plan has to be found for Opel in order to justify financial support from the state, and that the auto industry still faces the problem of "significant over capacity."

"It doesn't matter if its 20%, 30% or 40% (over capacity). It's a structural problem," Homann said.

Company Web site: www.opel.de

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