News: Fiat considers forming new company that will join Chrysler and GM in Europe

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Blind_Io

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http://www.autonews.com/apps/pbcs.dll/article?AID=/20090503/ANA02/305039991/1193

Fiat Group could combine its automobile business into a new company that would also include its new stake in Chrysler LLC and General Motors' European operations.

Fiat is set on acquiring GM Europe to get the automotive scale it believes is necessary to survive the car industry crisis. Its plan faces opposition from German trade unions as well as a possible rival bid from Canadian supplier Magna International Inc.

Fiat confirmed on Sunday it was in talks to acquire GM's European operations. The Italian industrial group said it would evaluate several possible new corporate structures, including a potential spin off of Fiat Group Automobiles into a new company with 80 billion euros ($106 billion) in annual revenues.

The company would include the group's Fiat, Lancia and Alfa Romeo brands along with Chrysler and GM Europe's operations, Fiat's board said in a statement issued on Sunday.

Fiat's board "expressed its full support for the initiative to be undertaken over the next few weeks by its Chief Executive Officer, Sergio Marchionne, to assess the viability of a merger of the activities of Fiat Group Automobiles (including the interest in Chrysler) and General Motors Europe into a new company," the statement said.

The Financial Times reported Sunday that Marchionne wants to join Fiat Auto with Opel/ Vauxhall, Saab, and GM's other European operations, and Fiat's stake in Chrysler.

The company would have sales of 6 million to 7 million vehicles a year -- second to Toyota Motor Corp. and roughly as many as Volkswagen AG.

?Marriage made in heaven'
In an interview with the Financial Times, Marchionne said: ?From an engineering and industrial point of view, this is a marriage made in heaven.?
He hopes to complete the transaction by the end of May, and list shares of the new company, tentatively called Fiat/Opel, by the end of the summer.
Marchionne told the Financial Times that Fiat and Opel would reap synergies of 1 billion euros a year by merging their small B- and midsize C- segment car platforms, and absorbing Fiat's ultra-small A platform and Opel's upper-middle D platform.

Marchionne plans to ask governments in European countries where Fiat and Opel have plants to offer the new company loan guarantees.

GM is shedding its European assets as it tries to avoid following Chrysler into bankruptcy. GM has a June 1 deadline to convince President Barack Obama's auto task force that it merits $15 billion in U.S. aid beyond the $15.4 billion it has already received.

Fiat struck a deal to buy an initial 20 percent of Chrysler on Thursday, just ahead of the deadline imposed by the Obama administration to cement an alliance.

German magazine WirtschaftWoche says Fiat had made an offer for Opel of less than 1 billion euros ($1.33 billion), which GM considered too small.
Citing sources close to the talks, WirtschaftWoche said it was not clear if the original offer had since been improved.

The Financial Times said Marchionne is scheduled to present his plan on Monday afternoon in Berlin to Frank-Walter Steinmeier, the German vice-chancellor, Karl-Theodor zu Guttenberg, economy minister, and Klaus Franz, co-chairman of Opel's supervisory board and head of its works council.

Magna has shown interest in Opel. Economy Minister Guttenberg said on Tuesday that Magna had presented the rough outlines of a rival offer to acquire Opel.

Trade unions in Germany and Italy oppose Fiat's bid for Opel because they fear factory closures and massive jobs cuts if the two volume carmakers combine.
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Fiat will grow too large all over the world and turn into GM. But then again, maybe not. VW pulled it off.
 
Right I have said this once, but I will say it again - you do not get the 'Thorpedo' by sticking together three drowning men.

UK Unions not too keen either - wait for all the work to go to lower cost countries and the old plants get shut down - all other things being equal; capital flows to the lowest cost provider of labour.
 
I'd much, much, much rather have Fiat buy said companies than Chery, SAIC et al. Go Sergio!
 
I guess that depends on whether or not GM wants to keep VX to sell imported Daewoos, which is a terrible idea.
 
It's very doubtful, that Fiat can pull that off.

They still have about 18 billion Euros of debts, so Fiat is not exactly a healthy company. Both Opel and Fiat compete directly against each other, so the fusion will probably produce cannibalistic effects.

Then there is the problem with overcapacities. Someone HAS to shrink and if Fiat is the boss, it will hit Opel. But the German government won't give Fiat one single cent, if they suspect that Opel might be the loser of this.

To me Marchionne's plan to take over GM Europe is just an attempt to save Fiat by getting rid of one major direct competitor, because he knows that Fiat is unable to survive the future in its current state and it is too weak to grow on its own.
 
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MacGuffin said:
To me Marchionne's plan to take over GM Europe is just an attempt to save Fiat by getting rid of one major direct competitor, because he knows that Fiat is unable to survive the future in its current state and it is too weak to grow on its own.
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They may also want to preserve their supplies of parts - aren't most of their larger models off GM platforms?
 
They have larger models?
 
They should call it American Motors and be spearhead by the Jeep brand. No idea why that sounds so familiar though..... :hmm:
 
Spectre said:
They may also want to preserve their supplies of parts - aren't most of their larger models off GM platforms?
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They are also using engines designed by GM.
 
I don't see Fiat buying Opel - half of the government and the worker's council are opposed to it. After Fiat went public with the plan of closing one of Opel's plants in germany, no politicial will go near them as long as Magma is still interested in Opel - it's election year, after all!

On top of that, "A match made in heaven" was the exact phrase used by J?rgen Schrempp to describe the Mercedes-Chrysler fusion.... and we all know that it did not end well. The US side says Merc drained Chrysler, while the german side says Chrysler's financial troubles almost killed Merc - in any way, it did no good.
 
Looks like Marchionne realized he made a mistake by announcing the possible shutdown of the Kaiserslautern factory. Suddenly now he speaks of keeping all factories.

Yeah, sure...

I don't buy a word the man speaks.
 
Here in Brazil, FIAT had the Marea that is now replaced by the Linea.
But yeah, FIAT sells mostly small cars. That?s what they do best. :)
 
Perhaps FIAT can pull this "Trick". Aquire stakes in GM, Chrysler etc, switch them to producing small Fiat 500 (or similar) based electric cars with 120 mile range etc. Production on such large scale will drive the prices down, sure enough there will be enormous demand for these.
 
I admire their ambition, and like someone else said in another thread, "I welcome our Italian overlords", but I don't think they can pull that off.
 
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