The boss of Italy\’s Fiat touted bold plans to create a new global auto giant by grabbing General Motors\’ European arm and merging it with Chrysler, in talks with sceptical German ministers.
Sergio Marchionne met the ministers to tout what he called a “marriage made in heaven” that would create a behemoth with revenues of 80 billion euros ($A145 billion), 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.
Assets for sale
It would also see Fiat seize advantage of the recession and the crisis engulfing the formerly mighty Detroit “Big Three” car makers to buy up once highly coveted assets at fire sale prices — and with government help.
“Fiat wants to do this deal without taking on debt,” Economy Minister Karl-Theodor zu Guttenberg told reporters in Berlin after being briefed by the Italian — an aim that would have been unthinkable 12 months ago.
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 a major stake — another step in the extraordinary recovery of the Italian national champion, which was on the brink of collapse just five years ago.
The enlarged Fiat 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.
Merkel\’s approval needed
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.
Struggling 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 loan guarantees.
Zu Guttenberg said Monday that according to Fiat\’s estimates it needs to bridge a “financing gap” of between five and seven billion euros before it can buy GM Europe.
GM has 55,600 employees in Europe including 26,000 at Opel in Germany and with September elections fast approaching, Merkel is desperate to avert a collapse of the firm, an industrial icon dating back to the 19th century.
But Marchionne came up against a sceptical zu Guttenberg and Foreign Minister Frank-Walter Steinmeier.
“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 over the weekend.
Steinmeier said that Fiat was only one of several interested parties.
Others attracted by Opel include Canadian auto parts maker Magna, who has reportedly teamed up with partners in Russia.
Trade unions sceptical
Trade unions across Europe are also sceptical, fearing large scale job cuts and plant closures if Fiat clinches a deal.
Italy\’s CGIL union, the biggest in Fiat, on Monday said the company must promise that production would be maintained in Italy even if it bought Opel.
Marchionne has said he cannot rule out factory closures.
The IG Metall union in Germany also expressed misgivings and Britain\’s main carworkers\’ union Unite voiced fears for plant closures at Vauxhall, a British-based part of GM.
“This move sends shivers down my spine,” said Tony Woodley, joint general secretary of Unite.
Willi Dietz, professor at the German auto industry think tank Institut fuer Automobilwirtschaft, said any takeover was unlikely to be pain-free.
“Opel has capacity to spare. Any investor will cut jobs,” Dietz told AFP.
Zu Guttenberg said Marchionne had assured him that Opel\’s three main assembly plants in Germany would not be closed, but that a factory making engines at Kaiserslautern might be shut.
Steinmeier insisted all the German Opel sites be kept open, in a statement after the talks.
Fiat\’s shares surged more than eight percent Monday on the Milan stock exchange.