Fiat CEO mulls global auto powerhouse

ROME – If Fiat Group SpA chief executive Sergio Marchionne has his way, the Italian automaker is on the path to becoming a global automotive powerhouse.

Marchionne is set to meet Monday in Berlin with German economic and foreign ministers to discuss Fiat’s offer for General Motors Europe’s German unit, Opel.

Fiat confirmed Sunday that it is in talks to buy most of General Motors Corp.’s European operations. It also said it is evaluating the possible spinoff of its auto business to form the core of a new company.

Fiat Group Automobiles includes the Fiat, Alfa Romeo and Ferrari brands. In addition, Fiat is in the process of acquiring U.S. automaker Chrysler LLC without putting up any cash.

The new auto company, which according to Fiat would have $105 billion in annual revenue, would put the Italian automaker in markets where it has little or no presence, including North America, traditionally the largest market in the world.

“They’re going to be a global powerhouse, I guess. Who would have thought?” asked Erich Merkle, an independent auto industry analyst in Grand Rapids, Michnigan “They seem to be on a buying binge right now, looking for cheap and distressed assets like Chrysler and Opel.”

Fiat is not Opel’s only suitor, 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 US government had weighed in.

The Chrysler deal, which must still be approved by a US bankruptcy court, would be in exchange for giving Chrysler access to Fiat’s small-car and engine technology. Chrysler cars and trucks also would be sold by Fiat through its global distribution network.

The deals would make Fiat a big global player, but that might not be the best thing for the Italian automaker, which might be overreaching with the acquisitions, said Merkle.

“This is a lot to take on, quite honestly,” Merkle said. “When you start looking at Chrysler, it’ll make them a very large automaker, but we’ve seen that large isn’t necessarily indicative of success.”

It will take years, Merkle said, for Fiat to gain any synergies by globalizing design, engineering and manufacturing operations with Chrysler and the GM units.