Sitting On A Chrysler Cashpile, Marchionne Covets Opel
Fiat/Chrysler CEO Sergio Marchionne casts longing eyes at GM’s palsied German daughter Opel, still, or again. Fiat was interested in taking Opel off GM’s trembling hands in 2009. Fiat is ready again, says the Italian business daily Il Sole 24 Ore, if Fiat gets a similar deal as with Chrysler: Opel for nothing, preferably with a cash sweetener.
Says the paper:
“The idea of the Italian-Canadian manager is to get Opel at virtually no cost, not unlike what happened with the first installment of Chrysler, and not unlike its proposal for Opel in 2009.”
Influential analysts urge GM to get rid of Opel which lost $16 billion since 1999. Morgan Stanley analyst Adam Jonas said that GM would need to spend up to $13 billion to convince a buyer to take the hot potato, and to fund Opel’s pension obligations. Marchionne is painfully aware of what it costs to restructure an ailing company in Europe.
For the deal to work, GM would have to dissolve its alliance with French PSA Peugeot Citroen, which is said to be on the rocks anyway. Fiat’s losses in Europe are offset by profits from the U.S , where Fiat “controls Chrysler, giving it a huge cash pile that could be used for acquisitions,” says Reuters,
Il Sole 24 Ore says the deal would be complicated. GM may not want to strengthen its rival Chrysler, where Opel technology would surely end up. Managing two ailing brands, Fiat and Opel, also would be a challenge.
Steve Girksy, chief of Opel’s supervisory board, says his company is not for sale. “GM fully stands behind Opel. Opel is a fully integrated part of GM’s global footprint and vital for GM’s future success in Europe. The GM-PSA alliance is fully on track,” Girsky said in an emailed statement. What else should he say.
Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.
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Apparently Sergio does not see Opel as damaged goods, the trick of course is getting it for next to nothing and going to war on BMW and Mercedes home turf.
No doubt GM is preparing for life after Opel, having switched most of their international car lines to GM-Daewoo product like the Spark, Sonic and Cruze. Opel has opened up shop in Australia, for example, under its own name and is marketing the Astra, which used to be a Holden. Funny how the US market probably depends more on Opel product than most of the others with the Regal and Verano. A tough choice has to be made. Do you cut and run in Europe or do you ride the recession out like everyone else? So far, GM has chosen the latter.