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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