Fiat boss touts plans for new global car giant
The boss of Italy's Fiat met with German ministers Monday to create a new global car company that would include Germany’s Opel.Berlin -- The boss of Italy's Fiat drummed up support in Berlin on Monday for audacious plans to snap up General Motors' European arm and merge it with the bankrupt Chrysler to create a new global auto giant.
Sergio Marchionne met German ministers to tout what he called a "marriage made in heaven" to create a new behemoth with revenues of 80 billion euros (106 billion dollars) making between six and seven million vehicles every year.
The new firm, which Marchionne wants to see quoted on the stock exchange, would be second only to Japan's Toyota, bigger than General Motors and Ford and around the same size as Germany's Volkswagen, Europe's biggest automaker.
Under one roof would be Fiat, GM's Opel, Vauxhall and Saab units, and the fallen US giant Chrysler, in which Fiat agreed last week to take an initial 20 percent, rising to 51 percent if Chrysler paid back massive state loans.
It would make everything from gas-guzzling Jeep sports utility vehicles in the United States to Opel's mid-range Astras and Insignias and the Italian firm's tiny and successful Fiat 500 -- a classic design from the 1950s.
Germany's Opel forms the core of GM's European operations, and Marchionne needs the approval of Chancellor Angela Merkel's government in Berlin for any deal to go through -- something that Marchionne wants in 30 days.
Fiat has offered around one billion euros (1.3 billion dollars) for Opel, a member of the works council at Opel's factory in Bochum in western Germany, Rainer Einenkel, told AFP.
GM has been trying for some time to offload a majority stake in Opel and the German government might be prepared to sweeten any deal by offering state-backed guarantees on its loans.
In March, GM Europe executives presented Berlin with a restructuring proposal that includes 3.3 billion euros in public aid from Germany and other European countries where it has factories.
GM has 55,600 employees in Europe including 26,000 at Opel in Germany, and with September elections fast approaching Merkel is keen to avert a collapse of the firm, an industrial icon dating back to the 19th century.
But Economy Minister Karl-Theodor zu Guttenberg and Foreign Minister Frank-Walter Steinmeier -- meeting with Marchionne on Monday -- will take some convincing.
"Anyone interested in Opel has to present a long-term vision. We are not going to tolerate any financial adventures with taxpayers' money," zu Guttenberg warned in the Bild am Sonntag newspaper this weekend.
Steinmeier told a news conference Monday that he had not yet been given details on Fiat's offer and that the Italian firm was only one of several interested parties.
"It is not decision time yet. Interested parties first have to fine tune their plans and then hopefully we will come to decisions in the coming weeks," Steinmeier told a news conference.
Germany's powerful trade unions are also sceptical, with IG Metall chief Armin Schild telling the Tagesspiegel newspaper that he opposed a deal with Fiat.
Opel "would not be strengthened but weakened and the domination over Opel would not end, it would be moved from Detroit to Turin (Fiat headquarters)," Schild said, preferring a tie-up with Canadian auto parts maker Magna.
Willi Dietz, professor at the Institut fuer Automobilwirtschaft in the southwestern town of Geislingen, said that unions are in for disappointment.
"Opel has capacity to spare. Any investor will cut jobs," Dietz told AFP.
In Britain, trade union Unite also voiced its opposition to Vauxhall being taken over by Fiat, saying it would be an "unmitigated disaster" that would cost jobs, the BBC website reported.
If Marchionne's vision becomes reality, Fiat would emerge as one of the winners of the global recession by seizing advantage of the devastating crisis that has engulfed the Detroit "Big Three" carmakers since last year.
Chrysler, the 90-year-old number three US auto maker, filed for bankruptcy last Thursday, crushed under a mountain of debt and dealt a fatal blow by the dizzying slump in the number of cars being bought worldwide.
The once mighty GM, until recently the world's biggest carmaker, is not far behind and analysts expect the firm to follow Chrysler's lead and throw in the towel soon.