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GM/Fiat Deal May Be Falling Apart

5 June 2000

    Italy - A Reuters story in The Economic Times is casting serious doubts of 
the alliance between General Motors and Fiat SpA.  The deal, which was 
highly touted as "imaginative", was originally announced nearly three 
months ago.

    The plan called for the two companies to combine purchasing, and engine 
and transmission production, thereby helping both to slash costs.  They were 
to swap stock ownership and join forces in Europe and Latin America.  GM took 
a 20 percent stake in Fiat Auto, and Fiat Auto took 5.1 percent of GM.

    However, the report states that there are worries that the alliance is too 
loose to be effective and that the entire deal may be just a disguised exit 
strategy for the Agnelli family (who control Fiat).  An unnamed analyst was 
quoted as saying, " Basically it won't work. The market is skeptical, the 
stock has collapsed. It is mainly an option for the Agnellis to get out if 
they see they don't want to be in cars any more. It's also the long-term 
aim of GM to buy Fiat Auto."


MJR