Chairman Says Fiat Sale to GM Likely

Fiat Chairman Tells Newspaper That Auto Business Sale to GM in 2004 Likely

ROME,July 2,2002- AP reported that the chairman and chief executive of troubled industrial group Fiat SpA says the most likely option for its auto business is that the money-losing operation will be sold to General Motors in 2004, the Financial Times said Tuesday.

"The strategic future of Fiat Auto has many alternatives. We have a number of options but the highest probability is that it will become a stronger member of this GM federation," Paolo Fresco told the newspaper.

"On one hand it means having a deeper relationship or another form of ownership," he told the Financial Times.

Fiat Auto is 20 percent owned by GM and has an option to force the Detroit-based company to buy the remaining 80 percent between 2004 and 2009.

Fresco insisted Fiat remains "fully committed" to straightening out its auto operations. But, he added, "Unless we can straighten Fiat Auto by 2004 we should not continue to do it."

This year the Turin-based carmaker posted a first-quarter operating loss of 429 million euros ($391.1 million), compared to a loss of 16 million euros in the same period last year.

Fiat has promised to sell assets and trim its work force as part of a plan to cut its debt of 6.6 billion euros ($6 billion) in half under a plan worked out with three Italian banks which recently arranged for a $2.7 billion loan to the company.