Fiat could bid for Opel if Chrysler deal falls through

In the high-stakes scramble for survival in the car industry, Italian car manufacturer Fiat Friday said it could pursue a deal with GM's Opel and Vauxhall brands if the pending partnership with Chrysler collapses.

Fiat chief executive Sergio Marchionne said that completing arrangements with Chrysler by the US-government-imposed deadline of April 30 was still his "first and foremost objective," the Detroit Free Press reported online.

But if that falls through, he would pursue the Opel and Vauxhall path.

"We have not had any direct conversations with Opel," Marchionne was quoted as saying. "If the opportunity were to arise, we would give it a hard look."

The news came even as General Motors prepared an unprecedented shutdown of 13 of its North American assembly plants to cut production by 1900,000 vehicles and relieve ballooning surplus inventories.

Earlier Thursday in Russelsheim, the head of the Opel workers' council, Klaus Franz, told the German Press Agency dpa that Fiat was bidding on Opel. He confirmed a media report that Fiat was to sign a declaration of intent as early as Tuesday.

A few days ago the head of Fiat's board of directors, Luca Cordero di Montezemolo, rejected speculation the company was interested in an Opel takeover, saying, "No, no, there is not."

Opel bosses also kept silent. "We are holding talks with possible investors, but we are not saying anything about individual investors," the German car manufacturer said.

German Economics Minister Karl-Theodor zu Guttenberg said no decision had been taken on Fiat's role. "The federal government is holding talks with various interested parties, without any predetermination," Guttenberg said.

Chancellor Angela Merkel's government last month offered state aid for potential investors to help the troubled German carmaker out of its difficulties caused by the looming insolvency of its US parent General Motors.

The online version of US daily Wall Street Journal reported that Fiat chief executive Sergio Marchionne had held talks with Guttenberg in Berlin last week.

The premier of the state of Hesse, where Opel has its headquarters, said he was pleased investors were showing interest in Opel. "Contrary to previous claims, there are interesting private investors," Roland Koch said.

Potential buyers include Austrian-Canadian car industry supplier Magna, who would be a more welcome investor for Opel management and staff, German news magazine Der Spiegel reported, due to the company's capacity for development.

Franz suggested General Motors and the German government were hoping for a speedy solution through the Fiat bid. "GM wants to offload Opel quickly," the workers' representative said, adding, "Fiat should then take over the issue of reorganization."

Franz claimed Fiat was not interested in a strategic partnership, but feared they simply wanted short-term access to guarantees.

"Fiat has 14.2 billion euros (18.4 billion dollars) of debt and huge liquidity problems. They can't get hold of money at the moment," Franz said.

Franz said he feared Fiat's true intention was to massively cut jobs, after the German elections in September.

"The government can't give guarantees for such a transparent plan," the top workers' representative said.

Car industry expert Ferdinand Duddenhoefer was sceptical that an alliance between the Italian and German rivals could work. "Opel and Fiat go together like fire and water," Duddenhoefer said.

"They would then make the same cars for the same markets, in the same factories, which already have surplus capacity," the industry expert said, adding, "Opel can only lose. Plant closures are to be expected."

GM, which has full ownership of Opel, bought a 10-per-cent share of Fiat nine years ago, but stepped out of the partnership in 2005, parting with 1.5 billion euros in the process.

The Italian carmaker sold 2.15 million cars last year, while Opel and British sister company Vauxhall sold 1.46 million cars in the same period.

Fiat slipped into deficit in the first quarter of 2009, with a minus of 410 billion euros. Sales fell sharply from 15.1 to 11.27 billion euros.

Industry magazine Automotive News speculated recently over a broad alliance between Fiat, GM's European and Latin American subsidiaries and Chrysler. Franz also considered this to be a workable solution.

Such a conglomerate would occupy the second position in the car sales market with combined sales of 7.05 million cars in 2008. Only Toyota in Japan reported higher sales, reported dpa.

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