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Old 04-29-2009, 09:12 PM   #1
Hazdaz
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Default Most bizarre news of the day: Fiat + Chrysler + Opel ... WTH?

http://www.freep.com/article/2009042...SS01/904240314

CEO calls alliance priority; no talks with GM unit yet



Quote:
With the U.S. Treasury poised to take Chrysler LLC into Chapter 11 bankruptcy, Fiat CEO Sergio Marchionne said completing a partnership with the troubled automaker is "my first and foremost objective," even as he acknowledged that he would look closely at an opportunity to acquire part of General Motors Corp.'s Opel unit.


"We have not had any direct conversations with Opel," Marchionne told analysts Thursday, following Fiat's disclosure that it lost 411 million euros, or $533 million in the first quarter of this year. Later in the conference call, Marchionne said he would give Opel "a hard look" if the opportunity arises.
The loss was larger than the 349-million-euro loss analysts had expected. Fiat earned a profit of 427 million euros ($555 million) in the first quarter of 2008.


With the May 1 deadline for completing a Chrysler-Fiat deal fast approaching, Marchionne's comments about Opel throw a new wrinkle into what is already a high-stakes chess match. President Barack Obama's auto task force has asked Chrysler to get creditors to write-off most of $6.9 billion in loans and squeeze even more concessions from the UAW and CAW as conditions for a $6-billion loan.


Reports surfaced this week about Fiat's interest in Opel. GM is selling a stake in its Germany-based unit as part of its restructuring. German and other European governments have offered about $4 billion if Opel cuts costs by $1.2 billion.
Despite Fiat's potential interest in Opel, Chrysler and Fiat continue working toward a deal.


"We believe it's important to keep all options open," Chrysler said in a statement. "Chrysler will continue to work through the end of the month," based on the direction given by the auto task force, to secure the support of the necessary stakeholders.


During a conference call to announce financial results, Marchionne reiterated Fiat's refusal to invest cash in Chrysler. Fiat and Chrysler say vehicles, engines and transmissions Fiat would bring to the partnership are worth between $8 billion and $10 billion.


Marchionne sees Fiat as a survivor in the traumatic global automotive shakeout unfolding. He has said a surviving automaker must have global annual sales of at least 5.5 million vehicles. That's more than twice the 2.2 million Fiat sold worldwide in 2008. To reach his 5.5-million target, Marchionne might have to invest in or acquire two competitors. Chrysler sold slightly more than 2 million vehicles last year and expects that to drop to 1.7 million this year. Opel and Vauxhall sold about 1.3 million passenger cars in Europe last year.


But given financial reality and Marchionne's reluctance to sell Fiat's Case New Holland or Iveco division, he likely can afford only one deal.


Fiat's cash reserves grew in the first quarter to 5.1 billion euros ($6.6 billion) from 3.9 billion euros ($5.1 billion) at the end of the year.
Now that would be one hell of a car company if it every happened (which I don't think it would)... German engineering, with Italian style and American... umm, we'll they'll figure out something for the American side to do, I guess.


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Old 04-29-2009, 09:20 PM   #2
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From Fiat's standpoint, the Opel acquisition makes way more sense than does the Chrysler one. IMO the US market is over saturated with capacity and the Fiat models will not gain much traction in terms of sales in the short term.
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Old 04-29-2009, 09:54 PM   #3
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^^ except that Fiat and Opel would have lots of overlap - both in terms of the geographic markets that they are strongest in now, and also in market segment. Still would sound rather interesting, but at least with Chrysler, Fiat would have an "in" into the richest car market and have next to zero overlap.

Any company looking to make an acquisition in the automotive world right now can't possibly look at the short-term. But in the long-term, picking up a company like Chrysler for $X billion is chump-change for what the pay-off might be... for instance, just the first quarter of '08, Fiat alone made a profit of 1/2 Billion dollars.
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Old 04-29-2009, 11:29 PM   #4
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^^ except that Fiat and Opel would have lots of overlap - both in terms of the geographic markets that they are strongest in now, and also in market segment.
That they do, but they also share some technology already, like the Epsilon platform and diesel engines.
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Old 04-30-2009, 03:26 AM   #5
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Originally Posted by Hazdaz View Post
^^ except that Fiat and Opel would have lots of overlap - both in terms of the geographic markets that they are strongest in now, and also in market segment. Still would sound rather interesting, but at least with Chrysler, Fiat would have an "in" into the richest car market and have next to zero overlap.

Any company looking to make an acquisition in the automotive world right now can't possibly look at the short-term. But in the long-term, picking up a company like Chrysler for $X billion is chump-change for what the pay-off might be... for instance, just the first quarter of '08, Fiat alone made a profit of 1/2 Billion dollars.
NA is not the richest car market, Europe and Asia are. Also a company like chrysler is useless. with the exception of Jeep, they have very little brand loyalty. I would say that maybe, just maybe the dodge truck might have something there. Otherwise that entire car company could just disappear and buyers would barely notice.

Having overlap isnt necessarily a bad thing, its not like they are paying a high price (given the govt subsidy) to acquire opel.
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Old 04-30-2009, 06:46 AM   #6
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NA is not the richest car market, Europe and Asia are. Also a company like chrysler is useless. with the exception of Jeep, they have very little brand loyalty. I would say that maybe, just maybe the dodge truck might have something there. Otherwise that entire car company could just disappear and buyers would barely notice.

Having overlap isnt necessarily a bad thing, its not like they are paying a high price (given the govt subsidy) to acquire opel.
China has (just recently become) the largest automotive market, but the US absolutely still has the richest car market - no other market buys the expensive, well-optioned, fully-loaded cars like Americans do. There is a reason that all automakers strive to get into the US... Americans are willing to spend ungodly amounts of money on cars.

And Chrysler - right now - might not have a ton of good products, but yes, their Jeep line is highly sought after, but they are also tops in the minivan game and still a decent competitor in the pickup world. The market for pickups might be shrinking, and the minivan market might not be the sexiest out there, but people will still be popping out kids and companies will still need heavy-duty workhorses. Both these categories still sell in volumes that would make any carmaker envious.
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Old 04-30-2009, 10:52 AM   #7
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I could see this being good.
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Old 04-30-2009, 11:11 AM   #8
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China has (just recently become) the largest automotive market, but the US absolutely still has the richest car market - no other market buys the expensive, well-optioned, fully-loaded cars like Americans do. There is a reason that all automakers strive to get into the US... Americans are willing to spend ungodly amounts of money on cars.

And Chrysler - right now - might not have a ton of good products, but yes, their Jeep line is highly sought after, but they are also tops in the minivan game and still a decent competitor in the pickup world. The market for pickups might be shrinking, and the minivan market might not be the sexiest out there, but people will still be popping out kids and companies will still need heavy-duty workhorses. Both these categories still sell in volumes that would make any carmaker envious.
and what volumes are those? Also recognize that chrysler vehicles arent sold at a high profit at all.
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Old 04-30-2009, 11:48 AM   #9
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^^ except that Fiat and Opel would have lots of overlap - both in terms of the geographic markets that they are strongest in now, and also in market segment.
Buying up your direct competitors is usually a good move.
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Old 04-30-2009, 12:15 PM   #10
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and what volumes are those? Also recognize that chrysler vehicles arent sold at a high profit at all.




As recently as 2 years ago, minivan sales were nearly a million units. While Chrysler might not own that market like they used to, they are still a very large player in that group and it used to be a cash-cow for them.


The RAM up until this past December was still a top-10 selling vehicle in the country... selling at near Honda Civic volumes (not sure about newer data). That is by no means a low volume vehicle and unlike most of Chrysler's cars, they were pocketing a nice profit on those trucks too.

Now don't get me wrong, sales for these 2 vehicles have tanked - and the charts clearly show that - but there is $ to be made (or at least there will be when people start buying vehicles again), and with the right product someone is gonna do it... be that Fiat-Chrysler or someone else.
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Old 04-30-2009, 12:57 PM   #11
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As recently as 2 years ago, minivan sales were nearly a million units. While Chrysler might not own that market like they used to, they are still a very large player in that group and it used to be a cash-cow for them.


The RAM up until this past December was still a top-10 selling vehicle in the country... selling at near Honda Civic volumes (not sure about newer data). That is by no means a low volume vehicle and unlike most of Chrysler's cars, they were pocketing a nice profit on those trucks too.

Now don't get me wrong, sales for these 2 vehicles have tanked - and the charts clearly show that - but there is $ to be made (or at least there will be when people start buying vehicles again), and with the right product someone is gonna do it... be that Fiat-Chrysler or someone else.
see i dont necessarily agree with using the past (in this case) to determine if chrysler has any brand value. The minivan - done...Chrysler's product is not better than the others out there.... the ram truck? also not better....

end result I dont think Chrysler has any products out there that are worth much.

Those volumes will continue to shrink IMO
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Old 05-03-2009, 06:30 PM   #12
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Not so bizarre anymore. I think this would make perfect sense. Sell CNH, and Iveco and form an automotive group that includes Fiat orginal, Chrysler and the GM European ops.

Quote:
Fiat eyes new company with GM Europe, Chrysler
Fiat confirms talks for GM's Opel, with eye to creating single car company including Chrysler

* Nicole Winfield, Associated Press Writer
* On Sunday May 3, 2009, 6:05 pm EDT

ROME (AP) -- Fiat Group SpA confirmed Sunday it was in talks to acquire General Motor's European operations with the aim of possibly creating a new company to also include its newly acquired Chrysler automaker.

Combined, the new automaker would have euro80 billion ($105 billion) in annual revenues, Fiat said in a statement.

Fiat said it was evaluating the possible spinoff of its auto business to form the core of the new company. Fiat Group Automobiles includes the Fiat, Alfa Romeo and Ferrari brands.

The statement was issued on the eve of a meeting in Berlin between Fiat Group CEO Sergio Marchionne and the German economy and foreign ministers to discuss Fiat's offer for GM's German unit, Opel.

GM Europe also includes the British company Vauxhall and the Swedish carmaker Saab.

GM has been trying to find investors for its noncore and unprofitable assets as part of a restructuring in which it has sought billions of dollars in aid from the U.S. government to avert collapse.

Opel has said it needs euro3.3 billion ($4.3 billion) to get through the economic crisis. The German government has said it doesn't foresee giving direct state aid. Chancellor Angela Merkel has suggested the government could help an Opel investor with loan guarantees.

Fiat said that over the next few weeks, Marchionne will be looking "to assess the viability of a merger of the activities of Fiat Group Automobiles (including the interest in Chrysler) and General Motors Europe into a new company."

"As part of this process, the group would evaluate several corporate structures, including the potential spinoff of Fiat Group Automobiles and the subsequent listing of a new company which combines those activities with the activities of General Motors Europe."

In an interview Sunday with Corriere della Sera, Fiat Chairman Luca Cordero di Montezemolo called GM's Opel an "ideal partner" and a possible takeover by Fiat an "extraordinary opportunity."

Fiat is not the only suitor for Opel, however. Last week, Canadian car parts maker Magna International Inc. presented German Economy Minister Karl-Theodor zu Guttenberg with what the minister called a "rough concept for a commitment with Opel."

Guttenberg has said the German government would wait to determine its role in any full or partial Opel sale until after the U.S. government had weighed in.

Fiat, meanwhile, has pressed ahead with a takeover of Chrysler, with attorneys for the U.S. auto manufacturer saying the company would file a motion to sell substantially all of its assets to the Italian automaker.

In addition to Fiat Group Automobiles, the Fiat Group also includes its agricultural vehicles branch CNH and its Iveco trucking unit, as well as a media arm.

Associated Press reporter Colleen Barry contributed to this report.
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