A radical overhaul of the car industry moved a step closer on Monday
as Fiat's chief executive set his sights on General Motors' Opel German
unit just four days after clinching a deal with Chrysler.
Sergio Marchionne sought government support for an ambitious plan to
swallow up GM's European operations to create a listed European
automotive giant, while debate over the ownership of Germany's Porsche
Germany's finance minister, Karl-Theodor zu Guttenberg, said Fiat's
plan was interesting but needed a closer look following talks with
Marchionne. Guttenberg said Fiat was seeking Europe-wide state
guarantees as part of the GM Europe deal.
Fiat shares rose 7 percent by 1320 GMT (9:20 a.m. EDT) as the market welcomed the prospect of a spin-off.
In fresh reminders of the dire state of the global auto industry, French new passenger car sales fell 7 percent in April
and Belgium reported a 22.8 percent drop.
Spanish automaker association Anfac said car sales in the country
fell 45.6 percent in April, declining faster year-on-year than in
March, which saw a 38.7 percent drop.
The spin-off of the auto group has always been an option prized by
the market because it brings out the stand-alone value of the auto
business without the built-in discount that comes from a conglomerate
like Fiat, Cassa Lombarda analyst Serge Escude said.
Combining with Chrysler as well as Opel, which makes up 80 percent
of GM Europe's annual sales of $34.4 billion, fits Marchionne's
strategy of bulking up Fiat to survive the crisis engulfing the auto
In Detroit, Chrysler asked the U.S. Bankruptcy Court for a swift
hearing into its planned sale to Fiat, a proposal that brought
immediate objections from some secured lenders.
Marchionne has said carmakers need to make over 5 million vehicles a year to make a profit.
Germany's Guttenberg said he did not expect a final decision on the
future of Opel to come out of his meeting on Monday with Marchionne.
Opel employs around 25,000 people at its factories in Germany.
The biggest opposition to a deal is likely to come from German and
Italian unions, fearing synergies to be extracted from a merger would
lead to job cuts and plant closures.
Industrial logic-wise, Opel makes a lot more sense than Chrysler.
The big hurdle we can see is social cost, Nomura International analyst
Michael Tyndall said.
It's all very well to say they compete broadly in the same markets
with similar platforms and there may be economies of scale. But the
broad translation of economies of scale is fewer jobs, and I'm not sure
if the Italian or German governments have the appetite for the job
losses a merger would entail.
Fiat and Opel would merge their small B and mid-size C segment car
platforms, absorbing Fiat's ultra-small A platform and Opel's
upper-middle D platform, the Financial Times said.
As well as Fiat, Austrian-Canadian car parts maker Magna has expressed an interest in Opel. Magna declined to comment on Monday.
The works council head of Opel said last week other investors were interested in the unit.
BATTLE FOR PORSCHE
In Germany, Focus magazine reported on Saturday that the Porsche and
Piech families, which control Porsche Automobil Holding SE, were set to
decide on a possible sale of Porsche AG and its eastern European dealer
network to Volkswagen in a move to cut Porsche's holding company's debt.
But Wolfgang Porsche, head of Porsche's supervisory board told the
Frankfurt Allgemeine Sonntagszeitung (FAS) on Sunday that Porsche would
not be sold to Europe's largest carmaker.
Volkswagen shares were down 2.28 percent at 1320 GMT (9:20 a.m.
EDT), while the DJ Stoxx European Autos index was up 0.77 percent.