Fiat boss in Germany raising support for purchase of GM's Opel

Article published on the 2009-05-04 Latest update 2009-05-05 06:28 TU

Badge on a Fiat 500
(Photo: Reuters)

Sergio Marchionne, the boss of Italy’s Fiat, was in Berlin on Monday raising support for a massive auto takeover. Fiat’s purchase of General Motor’s European arm and Chrysler would make it the second largest auto company in the world.

“This deal is potentially very exciting, it feels a little bit like being a child in a toyshop, who can have almost anything they want, because there are so many exciting automotive assets available right now for almost nothing,” says Chris Higson, from London Business School.

The proposed deal which would see Fiat, GM’s Opel, Vauxhall, Saab and Chrysler consolidated into one firm, would create a company with combined revenues of around 80 billion euros.

“The challenge for Fiat, will be to stay sensible, and think about integration, because integrating car companies, even in normal times, is extraordinarily difficult,” Higson told RFI.

Sergio Marchionne's Masaratti car in Berlin on 4 May 2009
(Photo: Reuters)

Fiat has already bought an initial 20 per cent stake in Chrysler, while it awaits approval from the German government for the deal with Opel, which employes 26,000 people in Germany.

“These are very complex businesses, and it's easy to see where you'd like to be in five years time, but getting there is a superhuman challenge,” says Higson.

Chrysler filed for bankruptcy last week after being hit by increasing debt and a fall in global demand for vehicles.

“All of this is going to depend on the goodwill of European governments, in their enormous desire to keep the European car industry afloat,” says Higson.

The proposed takeover would create a company producing between six and seven million vehicles a year.