Fiat considering new company to combine Chrysler and GM Europe

[Intrepidation]

Apparently, Fiat's alliance with Chrysler is only the beginning. According to a variety of reports coming out of the UK and Germany, the Italian automaker's expansion plans aren't limited to its 20% stake in Chrysler – Fiat is also considering acquiring General Motors' European operations, including Opel, Vauxhall and even Saab.

The result could be a new company that spins off Fiat, Lancia and Alfa Romeo, along with Chrysler and GM Europe, into one corporate entity worth around $106 billion and rivaling Volkswagen to become the world's second largest automaker behind Toyota.

In an interview with the Financial Times, Fiat's CEO Sergio Marchionne said of the union, "From an engineering and industrial point of view, this is a marriage made in heaven" and with the full support of the automaker's board, Marchionne hopes to have the deal completed in May, with shares of the new company – tentatively dubbed Fiat/Opel – available by the end of the summer.

Marchionne believes that the alliance would make Fiat a stronger entity in the global marketplace during the economic downturn and through merging Fiat and Opel's B- and C-segment platforms, along with absorbing Opel's larger D-platform and Fiat's sub-compact A-segment offerings, could save around 1 billion euros each year.

Of course, Fiat and Marchionne have a long road ahead. German trade unions are opposed to the deal, citing concerns about job losses and factory closures, and according to the German magazine WirtschaftWoche, Fiat's initial offer of $1.33 billion to acquire GM's European operations was considered too small by the General.

Marchionne is scheduled to present Fiat's plan to an assortment of German leaders later today and expect more to follow over the coming weeks.

Autoblog

[Croc]

Wow, FIAT has used GM to its advantage once before, why not again? I have to respect the acumen of the people running this company--they know how to play cutthroat.

[Teh Ricer Civic!]

Hmm, this would make VW and FIAT the largest competitors in Europe... i could see FIAT leveraging their new found scales of economies + Saab dealer networks to start selling in the US again...

interesting...

[Robert Hall]

This will be interesting to watch, to see what comes of it. So with the Fiat deal and the bankruptcy, will the Cerebus con artists still have any stake in Chrysler? I haven't read all the details yet.

Edited May 4, 2009 by Cubical

[ZL-1]

Biting more than they can chew?

[regfootball]

italians have balls, and i like it.

[Robert Hall]

Chrysler has had an interesting history w/ Italian companies, incl. the Ghia show cars in the '50s, the Imperial limos, the TC by Maserati, etc. Looking forward to seeing where this goes.

Edited May 4, 2009 by Cubical

[haypops]

Hmm, this would make VW and FIAT the largest competitors in Europe... i could see FIAT leveraging their new found scales of economies + Saab dealer networks to start selling in the US again...

interesting...

Isn't that what they have all those Chrysler dealers for(to sell in the U.S.)?

[David]

This will be interesting to watch. Why a car company would want to buy up money loosing operations that have really never produced a profit is beyond me, but if they can do what GM could not then more power to them. Course the unions in Germany are apposed to the deal as they will get busted eventually. I can see closing down the saab plant and some of Opels plants as they consolidate and get the product lines profitable.

GM should have done this long ago instead of caving into the unions. You have to have balls to play with the big boys.

[CaddyXLR-V]

This will be interesting to watch. Why a car company would want to buy up money loosing operations that have really never produced a profit is beyond me, but if they can do what GM could not then more power to them. Course the unions in Germany are apposed to the deal as they will get busted eventually. I can see closing down the saab plant and some of Opels plants as they consolidate and get the product lines profitable.

GM should have done this long ago instead of caving into the unions. You have to have balls to play with the big boys.

It's GM's overhead costs and bad management that make anything GM does unprofitable.

[Teh Ricer Civic!]

Isn't that what they have all those Chrysler dealers for(to sell in the U.S.)?

Mmm well 20% stake in Chrysler may not be enough to convince them to sell ALL of their products in the US. However outright ownership of Saab could.