Fiat are busy little bees of late. From being a virtually bankrupt car maker just a few years ago, they are busy rampaging around the world playing ‘White Knight’ to ailing car companies struggling for survival in the crisis that has engulfed the car world.
Recently confirmed as the key component in the rescue of Chrysler, where Fiat are to take an initial 20% stake in the Chapter 11 Bankrupt company which, subject to a few conditions, will rise to 35% and, in all probability, a controlling share in time, Fiat are now making a play for other ailing car brands.
Fiat have made it clear that they intend to swallow the European operations of that other ailing American giant, General Motors. In an audacious move, Fiat has made an offer for GM’s European operations Opel and Vauxhall, and in all probability Saab as well. If Fiat pull this off they will create a new company incorporating Fiat, Alfa Romeo, Lancia, Vauxhall, Opel and Saab, a company that will be at least as big as Europe’s current biggest car maker VAG.
For Fiat, this offers up some big cost savings, as well as a dominant position in many car markets around the world. They could easily consolidate many of the diverse car platforms across the range of companies making huge cost savings in the process.
Fiat has apparently already made an offer, believed to be in the region of £1 billion, for GM’s European brands. The General thinks that is too low, but these are extraordinary times, so who knows what will happen. One fly in the ointment however is going to be the unions operating in GM’s current operations.
The deal will only make sense for Fiat if they can consolidate a good portion of the manufacturing facilities they would end up with (read that as close down a big chunk). The unions, not surprisingly, would find that unpalatable. However, it may be a lot more palatable than a complete closure of a massive part of GM’s European operations. Or the proposed compromise for Vauxhall of simply rebadging Daewoos as Vauxhalls, which has been one proposal to allow Vauxhall to continue in some form.
Hard decisions all round. But Fiat is on a roll at the moment. Don’t bet against this happening.