Fiat faces bumps as it seeks Chrysler, GM Europe
Ambitious plans by Italian carmaker Fiat to become the largest in the sector after Toyota face a bumpy ride.
Fiat is planning to acquire both America’s Chrysler, which is in Chapter 11 bankruptcy, and the European operations of troubled General Motors, including the Opel, Vauxhall and Saab marques.
But the plan has hit obstacles in Germany where the government has issued a string of conditions for any Opel buyer.
Meanwhile, dissident Chrysler creditors say a sale to Fiat will be “patently illegal” and have asked a New York bankruptcy court to block the restructuring plan.
The group of about 20 money managers claim Chrysler’s proposal to creditors last week stripped them of their rights as senior lenders and ignored procedures in the bankruptcy code.
Fiat’s move to become the favoured buyer of GM Europe was kicked off by chief executive Sergio Marchionne’s visit on Monday to Berlin to meet government and union officials.
A Financial Times report says Germany’s vice-chancellor, Walter Steinmeiers, wants Opel’s future owners to retain the company’s base in Germany among 13 other criteria.
Fiat says a decision on a future headquarters for the merged group would be “premature” but adds: “Opel is a German company, so it needs a headquarters in Germany.”
While Fiat is the only motor vehicle company to show an interest in GM Europe, up to six others have been mentioned, including Canadian car parts group Magna International, sovereign wealth funds from Abu Dhabi and Singapore, and three private equity groups.
The Wall Street Journal reports Fiat shares soared on Monday as investors welcomed plans to create a European car giant with about €80 billion in annual revenue. Fiat shares closed up 8.1% on higher-than-average volume and outperforming an overall positive market.
In 2008, GM Europe sold about 1.4 million cars and Fiat about 1.18 million, according to data from the European association of car makers.
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Comments and questions2
We have all seen what happens when the money men try and run an auto company There will be 6 or 7 auto companies left in 5 years time and governments that think they can prop up their local operations will find its a bottomless pit that you just keep tipping money in with no return
Best to strike a deal with a maker that has a proven track record or start to treat your local company as part of your social welfare system
Fiat group should steer clear, in my view. While technological interaction has helped Alfa and Fiat, it would be better value to perhaps buy the equipment used to make the current Alfa I4 and V6 engine blocks off Chrysler. And why buy Opel ? Opel/Vauxhall/Holden (yes - Holden ! Snobbishness is stupid) is the lowest tier of German car manfacturers, sharing a spot with Ford Germany. And Ford has been better on product quality and price, thanks to its links with Mazda.
Fiat should steer clear of Chrysler - but - linking up with Nissan might not be such a bad idea (despite the awful ARNA of the 1980's), and forming links with as many equal sized players as it can find. This was what made the French PSA group so successful to the present day - a number of different manufacturers with similiar goals staying together, and making money.
Audi itself is the result of such close team work - technically speaking, it is the remaining member of the Auto Union - Audi, Horch, DKW and Wanderer. An Audi is really descendant of the Horch, but Audi sounds (nice pun that) so much nicer. And team work saved Audi again - by working with Volkswagen and Porsche in the 1980's and 1990's, making it a powerhouse again.
Fiat has a similiar structure to the big Germans. Ferrari is the sports car division, with Alfa making the sports sedans, and sharing a parts bin with Ferrari (I play a game of 'spot the Alfa bits every time I take a periodic visit to the Ferrari showroom.) - This is paralleled by the relationship between Porsche and Audi. Volkswagen and Fiat are a similar market segment, though the high-end VW's are more akin to the Maseratis in some respects, as the Masers are similiar to the Audi R8 and coming R10.
Fiat group's will make their own way, as always. However it is simply not true that they are losing money. Rather its more accurate to say they are not making enough, but who does these days ? I suspect most manufacturers are going to make more producing parts than they are making cars....
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