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Car industry shake-up looms as Fiat eyes Opel
(Agencies)
Updated: 2009-05-04 23:46
Marchionne has said carmakers need to make over 5 million vehicles a year to make a profit.

Car industry shake-up looms as Fiat eyes Opel
The logo of Italian carmaker Fiat is shown on the radiator grill of a car in Basel April 23, 2009. Fiat will sign on April 28, 2009 a letter of intent to buy a majority stake in General Motors' struggling Opel unit, the website of German magazine Spiegel said on April 23, citing sources. [Agencies]
Germany's Guttenberg said he did not expect a final decision on the future of Opel to come out of his meeting on Monday with Marchionne. Opel employs around 25,000 people at its factories in Germany.

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The biggest opposition to a deal is likely to come from German and Italian unions, fearing synergies to be extracted from a merger would lead to job cuts and plant closures.

"Industrial logic-wise, Opel makes a lot more sense than Chrysler. The big hurdle we can see is social cost," Nomura International analyst Michael Tyndall said.

"It's all very well to say they compete broadly in the same markets with similar platforms and there may be economies of scale. But the broad translation of economies of scale is fewer jobs, and I'm not sure if the Italian or German governments have the appetite for the job losses a merger would entail."

Fiat and Opel would merge their small B and mid-size C segment car platforms, absorbing Fiat's ultra-small A platform and Opel's upper-middle D platform, the Financial Times said.

As well as Fiat, Austrian-Canadian car parts maker Magna has expressed an interest in Opel. Magna declined to comment on Monday.

The works council head of Opel said last week other investors were interested in the unit.

Battle for Porsche

In Germany, Focus magazine reported on Saturday that the Porsche and Piech families, which control Porsche Automobil Holding SE, were set to decide on a possible sale of Porsche AG and its eastern European dealer network to Volkswagen in a move to cut Porsche's holding company's debt.

But Wolfgang Porsche, head of Porsche's supervisory board told the Frankfurt Allgemeine Sonntagszeitung (FAS) on Sunday that Porsche would not be sold to Europe's largest carmaker.

Volkswagen shares were down 2.28 percent at 1320 GMT (9:20 a.m. EDT), while the DJ Stoxx European Autos index was up 0.77 percent.

 

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