By on April 21, 2009

Fiat, the great Italian hope for the American auto industry, has a lot of expectations to live up to right now. Not only are the Torino boyz tackling the miasma of despair that was the Chrysler corporation, but Automotive News [sub] reports that Fiat could “form an alliance with General Motors’ core operations in Europe and Latin America.” Italian-American Leyland, anyone? Fuhgeddaboutit. According to anonymous sources, talks with GM are in the “early phases,” which means that nobody has suggested that an allied Chrysler, Fiat, Opel/Vauxhall and GM Latin America might be too much concentrated fail for one corporation to handle. And Fiat’s got the usual unnamed competition for Opel to contend with. “More than six people have expressed interest, serious people,” says GM CEO Fritz Henderson of his firm’s unwanted Opel/Vauxhall operations. Why so serious? Did previous offers come from folks wearing giant shoes, tiny hats and rubber noses? More importantly, if one of these “more than six serious people” comes from Fiat, might it not be time for a reality check on that firm’s transformative power?

Another Automotive News [sub] report points to the minor hitch in the industry’s Italian rescue plan: Fiat is in a spot of bother itself. Fiat Group’s Q1 financial results show a $90.5 million trading loss, says AN, down significantly from its $990 million profit in the same quarter of last year. The Group’s auto division accounts for nearly $150 million of the loss. Keep in mind that these are “trading losses,” which Fiat describes as operating profit or loss “before extraordinary items.” Analysts say Fiat Group’s net losses could be as high as $300 million. Fiat CEO Sergio Marchionne had predicted a $1 billion “trading profit” for the year and a net profit of $300 million after restructuring costs, despite warning that Q1 2009 could be “the worst of the year.” AN reports that “the analyst consensus is now for a 870-million euro trading profit and a 210-million euro net loss for the full year.”

Get the latest TTAC e-Newsletter!

12 Comments on “bailout Watch 504: But Who Will Rescue The Rescuer?...”


  • avatar

    This whole thing is endlessly amusing, or would be if such high stakes weren’t involved. As someone old enough to remember FIAT’s bad old days in America, I just can’t see how they can be considered a viable option to even bail out Chrysler, much less help GM, particularly after the previous GM/FIAT debacle. Perhaps GM is trying to get back the money they paid FIAT to go away.

  • avatar
    MLS

    I’m loving the Jaws: The Revenge screenshot. Merely a flesh wound, indeed.

  • avatar

    The GM rumor had been denounced the same day it was floated:

    https://www.thetruthaboutcars.com/editorial-opel-soon-set-free/

  • avatar
    windswords

    Don’t jump to conclusions because a European auto analyst who couldn’t even name Chrysler’s lineup is all down for an Opel/Fiat tieup. Of course he likes that idea. It brings him business. Stuff happening in the US/Canada may not.

    Problem for Fiat is cost. They don’t have any money. As a matter of fact they are losing money. That’s why they are particulary interested in Chrysler because they get access for free plus a 6 billion dollar low interest loan from Uncle Obama. If Chrysler goes C7, then they have to bid $ on the pieces – money they don’t really have. That’s why I don’t buy the “FIAT should wait for a Chrysler BR and pick it up on the cheap” meme. What if they don’t have the funds? What if they get out bid by another automaker for something they really want (like factories)?

    As for Opel, GM is expecting half a billion euros ($649 million) as the minimum for anyone to get Opel. FIAT isn’t going to do that deal.

  • avatar

    I retract my previous comment: https://www.thetruthaboutcars.com/say-it-ain%E2%80%99t-so-cerberus-and-opel-pimped-by-berger/

  • avatar
    jpcavanaugh

    Once we get the Fiat/Chrysler/Opel/GM company up and running, maybe Daimler Benz can buy it in a “merger of equals” Don’t you all just drool over the synergies and new paradigms? Then we can start all over.

  • avatar
    MikeInCanada

    Re windswords :

    You bring up a good point Fiat’s might not have the cash to by ChryCo’s assets in a foreclosure sale situation. The question is ‘What are their assets’?

    Dealer network, some back office operations (misc admin, marketing), Jeep brand – I can see some value there – however the actual factories; forget it.

    Short of renting out the space as toxic or hospital waste dumps what good are any of these facilities?

    Now, they are not all dumps. Here in Canada the ChryCo Brampton facility is considered a state of the art manufacturing facility. The problem is that while the building might be considered new to somewhat new, it comes with union that suffice to say ‘is not so new…’

    In Canada (please confirm if it is the same in the US) the factory comes with the union. When you buy the real estate, you buy the labor contracts too.

    Is it so far fetched to believe that the gov’t would subsidize a Fiat led purchase of some ChryCo assets – if for no other reason to keep a couple hundred dealers open?

  • avatar
    windswords

    MikeInCanada,

    As far as I know, after a C7 there is no more union representation. The company is gone. So if you buy a factory you get to hire whoever you want.

    Also the SHAP (Sterling Heights Assebly Plant) in MI is state of the art. Belvedier ain’t bad and St Louis South had a big renovation to build the new minivans before it was shut down a year later. Toluca Mexico (PT Cruiser, Dodge Journey) is also a modern flex plant.

    Then there is intellectual property. Engines, like the new Pentastar V6, ENVI projects, etc. And of course Toledo, Jefferson North, and the Jeeps. So yea there’s some good cherries to pick there!

  • avatar
    imag

    I scrolled down on this article and saw the title first.

    I thought it was going to commence Death Watch: US Gov’t Edition.

  • avatar
    tpandw

    All of this melodramatics is just a slight taste of what we’re to get in another month when the GM ‘deadline’ expires. If it weren’t so sad it would be hilarious.

    BTW, I just bought another Subaru (my 7th) yesterday.

  • avatar
    OldWingGuy

    I think Windswords is absolutely right.
    FIAT picks this up for no-money down and gets some assets.
    I wonder if FIAT is a sub-prime automaker?
    Hey, isn’t that what started this mess in the first place ? Sub-prime borrowers buying big houses (factories)with nothing down?
    Maybe FannieMae or FreddieMac can finance FIAT…

    You just know that if a deal is done, the Obama administration will have to keep FIAT-ChryCo limping along until after the second term elections. FIAT-ChryCo will have to start making toilet seats and hammers so the Defense Dept can quietly throw them a few billion a year.

  • avatar
    Kurt.

    The whole Chrysler – FIAT – Opel auto consolidation sort of frightens me. See, if it were just Chrysler heading to C7, no one would care. It would be bad, it would hurt, but it would happen and we would get over it. With GM, who’s too big to fail AND Chrysler, SOMEBODY has to step in to save them or drag the country(s) down with them. Are’nt we just creating another “too big to fail”?

    I have this growing dislike for consolidation and “Corporate Socialism”. No one should be too big to fail. I’m no Communist but this is one case where The Gov’t should step in and share the wealth. Make several smaller “independent” companies with different owneers and differnt boards.

Read all comments

Back to TopLeave a Reply

You must be logged in to post a comment.

Recent Comments

  • 96redse5sp: “Genius” Putin had started to make plans to invade Ukraine after they toppled his buddy (and...
  • 96redse5sp: I was thinking Chuck Barris.
  • kjhkjlhkjhkljh kljhjkhjklhkjh: “”We WaNt FrEeDuMb Of ChOiCe!!1111!!!!”” scream the pubes...
  • MRF 95 T-Bird: I have a neighbor who owns a GLA. When it’s idling you can hear the diesel like chatter.
  • Jeff S: I have learned a lot about different cars from Corey’s excellent series. Corey’s writing is a...

New Car Research

Get a Free Dealer Quote

Who We Are

  • Adam Tonge
  • Bozi Tatarevic
  • Corey Lewis
  • Jo Borras
  • Mark Baruth
  • Ronnie Schreiber