From the times today, any thoughts on future implications for the fiat group? www.timesonline.co.uk http://www.timesonline.co.uk/printFriendly/0,,1-5-1403482,00.html GM meets Fiat head on to seal carmakers fate From Richard Owen in Rome EXECUTIVES from Fiat and General Motors began long-awaited confidential talks late yesterday on the sale of the giant Italian companys car business, as a crucial deadline looms. The talks, held in secret at a location believed to be in Switzerland involve Sergio Marchionne, Fiats chief executive, and Rick Wagoner, his counterpart at General Motors (GM), who are at loggerheads over an undertaking by the American company under which Fiat has the right to sell its car business to GM. Although best known outside Italy for its cars, Fiats interests stretch from agricultural and construction equipment to the insurance, energy and media sectors. It also owns Juventus, the Turin football club. Under the deal, agreed in 2000, GM bought 20 per cent of Fiat Auto and committed to an option giving Fiat the possibility of selling the remaining stake. The GM holding was later reduced to 10 per cent with an option to buy 90 per cent. Last year the two companies agreed to postpone the decision until January 24, 2005. General Motors asserts that it cannot undertake to buy Fiats auto division at a time when the car market is weak and it is having to deal with losses and job cuts at its troubled Opel business in Europe. Some Fiat executives have long viewed the disposal of its auto division as the key to profitability after years of losses. The move towards selling the auto division gained momentum after the death of Gianni Agnelli, Fiats patriarch, in January last year at the age of 81, and of his brother Umberto in June this year. Signor Marchionne, a relative newcomer to a company long dominated by the Agnelli family, yesterday said that he did not believe GM would allow the Fiat auto division to dwindle away. I think it would be very difficult for GM, being the largest carmaker in the world, to walk away from its responsibilities, he said. Industry sources say Mr Wagoner will argue that GMs option to buy has been invalidated by Fiat Autos recent recapitalisation and sale of assets. Signor Marchionne denies this, and last week said that selling Fiat Auto remained a real, live possibility. The European Automobile Manufacturers Association said that despite the launch of new models, Fiats European car sales had fallen 7 per cent last month despite a rise of almost 10 per cent in sales across the industry as a whole. Italian newspaper reports suggested that Fiat might drop its insistence on GMs option to buy in return for compensation of up to $1 billion (£520 million). However, Il Sole 24 Ore, the Milan financial daily, claimed that Fiats starting price was $3 billion.
