The German government will meet later on Wednesday to decide which of the four bidders for Opel and Vauxhall it will back with loan guarantees, BBC reported.
Owner General Motors will have the final say, but the German government's backing is crucial, as GM would struggle to find a buyer without it.
But a spokesperson for UK Business Secretary Lord Mandelson said GM wanted to keep talking with all bidders.
All had committed to maintain Vauxhall production in the UK, he added.
The future of GM in the US is also in doubt as bondholders have yet to reach agreement over a debt-for-equity swap.
Bidding war
German Chancellor Angela Merkel will be meeting GM representatives and US government officials at 2000BST on Wednesday night.
Her government is being asked to put up hefty loan guarantees for the winning bidder for GM Europe, so its backing could sway US parent GM's ultimate decision on who to sell to.
This is because Opel has its headquarters in Germany, and 25,000 of the firm's 50,000 workers are employed in the country.
The four bidders for GM Europe are Italy's Fiat, Canada's Magna, Belgium's RHJ and China's Beijing Automotive Industry Corporation (BAIC).
With an election looming, Berlin does not want to see too many job losses arising from the takeover.
Magna says it will lay off 2,500 workers in Germany, while Fiat says it will cut 2,000 jobs.
BAIC, however, says it will not cut any jobs for at least two years.
But the takeover will also affect 5,000 Vauxhall workers at plants at Ellesmere Port and Luton in the UK, and there are fears that the German government's influence could prejudice UK jobs.
Derek Simpson, general secretary of the Unite union in the UK, fears the Germans will support a bid which offers no protection to British workers.
The UK government has said it might consider making a financial contribution to help secure the future of Vauxhall.
US bondholders
GM faces a 1 June deadline to either restructure its debt or file for bankruptcy.
It has been trying to do a deal with bondholders, under which they would trade in $27bn in debt for a 10% stake in the recapitalised company.
The majority of bondholders have been against the deal from the start, believing that the stake being offered is too small.
An announcement on the outcome of the negotiations is expected later on Wednesday, but failure to secure a deal could see the troubled carmaker forced into bankruptcy.
"It's still possible that President Obama's motor industry task force, which has been handling all the talks, will offer bondholders a bigger stake in GM as a last-minute sweetener," said BBC North America business correspondent Greg Wood.
"But the smart money is on bankruptcy."
A deal brokered on Tuesday with the Canadian Auto Workers Union to reduce labour costs means that bondholders may be able to take a greater stake.
GM has been hit hard by a slump in sales during the economic downturn and has taken billions of dollars in state aid in order to stay afloat.
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