Fiat eyes GM Europe deal, aims to grow

John Dimsdale May 4, 2009
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Fiat eyes GM Europe deal, aims to grow

John Dimsdale May 4, 2009
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Kai Ryssdal: In bankruptcy court in New York City today Chrysler asked for an early hearing into a sale of billions of dollars worth of its assets. Company lawyers say that would clear the way for Chrysler’s proposed alliance with Fiat.

Fiat executives meanwhile were in Germany today. They’re trying to figure out how to take over General Motors’ European operations. Not too long ago Fiat was a down on its luck Italian car company. But if everything it’s working on now comes together, it will wind up as the second largest automaker in the world. Marketplace’s John Dimsdale has that story.


JOHN DIMSDALE: Nine years ago, high-flying GM bought a 20 percent stake in struggling Fiat and even made a down payment for an option to buy the whole company. But Brendan Moore, the publisher of Autosavant.com, says the Italian car company’s earnings kept falling and soon GM wanted nothing more to do with it.

BRENDAN MOORE: In 2005, Fiat was almost bankrupt and GM paid them $2 billion just to get out of the put option. How times have changed.

Fiat has engineered a dramatic turnaround under its new CEO Sergio Marchionne, with Italian styles and better engineering. He sees an opportunity to market those new cars to Americans says Pierluigi Bellini with IHS Global Insight in Milan.

PIERLUIGI BELLINI: Building a network, a distribution network takes many years. For example there are many Japanese and Koreans that took like 10, 15 years to build a network. In the case of Chrysler you already have 3,000 dealers over there.

Chrysler isn’t the end of Fiat’s ambition. Keith Crain, the publisher of Automotive News, says there are plenty of international automakers on sale these days.

KEITH CRAIN: The opportunity to buy Chrysler, the opportunity to buy General Motors Europe, and even General Motors Brazil, are unbelievably good because of the poor global economy.

But he says Fiat’s effort to become the Roman Empire of the auto industry is also risky since the company is still burdened with plenty of debt from its brush with bankruptcy just two years ago.

In Washington, I’m John Dimsdale for Marketplace.

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