Fiat considering new company to combine Chrysler and GM Europe
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.
[Source: Automotive News – Sub. Req. | Image Source: Vittorio Zunino Celotto]
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Reader Comments (Page 1 of 3)
ij70 1:55AM (5/04/2009)
Wow.
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zamafir 9:11AM (5/04/2009)
ditto, i like how fiat has learned nothing of GM's bid to buy everyone about a half decade - decade ago (SAAB, Subaru, everyone) and how that helped weaken them. Go for it fiat, and make sure ferrari enters lemans so the fail can spread across all aspects of the company and subsidiaries.
Mazda FTW! 9:49AM (5/04/2009)
zamafir - VW can maintain a far-flung empire with dozens of brands. Perhaps FIAT can do the same? They used to be Europe's #1 car-maker not too long ago, after all.
And don't worry, they won't enter Le Mans. However, if Ferrari did enter Le Mans, I wouldn't consider it a "fail" either. Ferrari know first-hand that domination can be easily over-thrown. Audi will have much cause for concern.
Jei 11:04AM (5/04/2009)
Agreed. Crazy that 5-7 years ago. GM was the giant the owned or had a piece of everybody else. Now Fiat is trying to become something similar. They should both take lessons from VW in how it has successfully operated multiple mainstream, luxury, and ultra-luxury brands in virtual harmony thus far.
Flea 1:59AM (5/04/2009)
I believe a photoshop of Italy with an evil world-dominion laugh coming out of it would in order by now...
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AUTOMANIAC 6:11AM (5/04/2009)
Pinky and the Brain....
phewop118 2:04AM (5/04/2009)
GM enabled Fiat when they paid them billions of dollars to go away several years ago. I would bet that right now they look back at that and want to kick themselves pretty badly.
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Sea Urchin 8:53AM (5/04/2009)
Especialy since Fiat has so many great small cars that GM could have offeren in last 4-5 years as gas was increasing.
Again, the issue is the same, managment was made of apes.
Mr.Oak 8:55AM (5/04/2009)
Sad that you look at it from this point of view. GM business model form the past 100 years is not serving them well. Saab is dead weight. if Opel/Vauxhall/Saturn sharing models over three different markets couldn't be profitable, then let them go. I am looking forward to what a more focused GM could become. Over time, FIAT will realize that owning so many models in a given market that competes directly with each other, is not the way to go.
In Europe: FIAT\Alpha\Opel\Saab\Lancia will have considerable market overlap. In a slowed down world economy, I give them 5 years before they start killing off brands.
Judy Zik 12:40PM (5/04/2009)
+1 Mr Oak
This seems to be more about a certain CEO's ego that business sense. In a world where the automakers have been paying good money to kill off brands with deep histories and close plants paying money to buy brands and plants that overlap your own doesn't make sense. This is like the ill fated Chrysler-GM marriage. If Fiat pulls this off they will be trading borrowed cash for money losing brands (for the most part) at the height (we hope) of the worst down turn since the depression. The Swedes and the Germans will force them to sign agreements to keep jobs and money losing factories in order to get the government money they will need to stay afloat. The level of cutting and integration required to turn them into a combined group working in harmony is mind blowing. Meanwhile the economy is in the toilet and Fiat itself is losing money and the money these divisions for the most part would be losing will just be another boat anchor which is why Ford got rid of it's non core brands. The money and attention would be better spent improving the lineup and dealer network they have and marketing it more not creating overlap. Let the dying brands die and be there ready to pick up the marketshare they leave behind.
Jonathan 2:05AM (5/04/2009)
Opel/Vauxhall will, in all likelihood, go to the same bidder because they make the same products. It would be a terrible business decision to separate them.
SAAB should be sold wherever Opels are sold. GM, no one wants to drive a Buick! Buick has less brand equity than Kia as far as I can tell; some people I know actually drive Kias. If Americans like European cars, give them Euro cars! Opel-SAAB dealers. Build them.
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SS 8:53AM (5/04/2009)
"Opel-SAAB dealers. Build them."
Why?To sell the few hundred Saabs they sell everymonth?And the Opels that have flopped?As far as I know, all Opel models are already sold here in America as Saturns.
Mr.Oak 9:07AM (5/04/2009)
Jonathan. The numbers prove you wrong. Globally, GM sold more Buicks than Pontiacs, Saabs and Saturns. You personally may not like Buick, but it was one of GM's PROFITABLE divisions.
The BUICK Enclave also proves you wrong, since I see lots of them everywhere.
The BUICK Lucerne is quite popular geriatric set. (it will soon be discontinued).
The BUICK Lacrosse will be even more popular.
GM made a major BooBoo by not bringing the Park Avenue here. Now that FORD has killed off the Lincoln Continental, this was a missed opportunity to grab the executive sedan market. That car would kill in corporate sales.
Luis 9:51AM (5/04/2009)
"
The BUICK Lucerne is quite popular geriatric set. (it will soon be discontinued)."
And so will they...
Greg 10:06AM (5/04/2009)
@Jonathan,
As so many people have pointed out on this blog before, Buick is HUGE in China and has a very strong brand identity and equity there.
Jonathan 12:22PM (5/04/2009)
AMERICANS will never buy Buicks in substantial numbers. Buick = old person's car; there is no escaping it. Positioning a brand as mid-level only works if people like the brand more than lesser brands.. The problem is, most people would rather drive a Honda, Hyundai, Toyota, Chevy etc BEFORE any Buick.
SAAB has floundered in the US because GM doesn't know how to make real SAABs. Imprezas and Trailblazers are not SAABs. Only two Opels were brought here as Saturns: the Sky and the Astra. Why would Opel be better than Saturn in the states? Its German, it never made the Ion, and the badge is cooler. Now instead of getting the awesome Insignia we get the the Buick Lexus GS Lacrosse sans E-Class headlights. Great.
its marketing guys
SS 2:44PM (5/04/2009)
+ Vectra is here as Aura(and previously,Malibu) Vue is nothing but a rebadged Antara( originaly a daewoo).Corsa is theonly Opel car thats not sold in America for a good reason.Apart from an even tinier Agila(borrowed from Suzuki) what other models does Opel have? Do you think its worth bringing a new brand that Americans know nothing about just for Insignia?Current Germans sell for a reason-not just for being called a German(we all know how that turned out for VWs van).You should also look up what happened to Opel in markets like India.
About Buick,I agree with the responses above.Its sells in China so has potential.
Bloke 8:42AM (5/05/2009)
SS - the only GME product sold in the States lock, stock and barrel is the Astra. The Antara isn't a GME product; it was developed (and is built) in Korea by GM-DAT, and the North American Vue spin-off has a different interior, engines and suspension set-up. As for the Aura, it shares nothing with the Vectra except for the front wings, bonnet and door mirrors; the floorpan is taken from the Vectra estate which has a longer wheelbase.
The Luigiian 2:08AM (5/04/2009)
Somebody needs to tell Sergio Marchionne that while you can't cut your way to solvency, you also can't buy your way to solvency.
To make money in the car business you need to offer the best products money can buy. Does Chrysler make the best products money can buy? Saab? Opel?
To become big and stay big, you need also to offer the best products money can buy, and have coherent brands with focused advertising and specific consumers in mind. You can't just buy a bunch of unrelated auto companies and say "There, now we're bigger than VW."
Also: Do any of these brands currently make money? I was under the impression that most, if not all, of GM's brands were money losers which is why GM is trying to unload them in the first place. How is strapping a bunch of struggling companies together under one single struggling brand going to do anything to keep them strong through this recession?
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blue3874 2:18AM (5/04/2009)
This eerily reminds me of the history of British Leyland in your argument, with poor product from multiple companies under one umbrella struggling in the marketplace.