Fiat Bids For GM Operations

Fiat is gunning for General Motors after almost taking over Chrysler. Fiat is ready to take on the Opel brand of cars currently owned by GM, which will enhance the Italian company’s profile as a world leader. It could also take over GM’s traditional rivals the Japanese and Korean car manufacturers.

Till the year 2003, Fiat was incurring loses continuously, but in a major turnaround after that it was posting profits every year. In a surprise move, the Italian car manufacturer made a bid to take over Opel and other GM brands. By adding GM and Chrysler to its profile Fiat comes very near the largest car manufacturer in the world Toyota.

However, the road to glory is filled with a lot of obstruction. Fiat needs to get the approval of German government which is assisting protecting the brand. Opel went into rapid descent after its parent company General Motors went down facing a recession.

But German government wasn’t to protect the workforce at Opel. The government is pressing the Italian car giant to give assurances and guarantees on a range of topics. One of their conditions is that if the company merges there should be no job cuts. Fiat has promised to retain the Opel manufacturing units but has stated that will have to resort to restructuring. The current Fiat Chief Executive Sergio Machionne gave no firm assurances about cutting jobs.

The Italian car manufacturer who now holds more than 10 percent of the European market credits its turn around to Sergio Machionne. Since his take over as the CEO he has become famous for his hire and fire policy. He told the German media persons that staff levels will have to be cut and no one will be able to change that. The plants will have to become more efficient.

At present Opel has strength of 25,000 employees and if Fiat moves it will resort to substantial reductions in the employee strength. Apart from Opel, GM also owns Saab in Sweden, Vauxhall in Britain, Chevrolet, GMC and Buick, Cadillac and Hummer in United States. Fiat has hinted that it wants to take over GM-Europe operations.

Just like GM, Fiat also has the practice to share platforms and technology among its subsidiaries. This could make it the most preferred bidder for the Opel brand. As far as Fiat’s plans goes, it wants to combine three brands- Fiat, GM and Chrysler – which will totally manufacture more than 7 million units of vehicles every year. If Fiat wins its Opel bid it could also bid for GMs Asian operations which currently have the two biggest markets India and China.

Fiat has been in India for almost six decades ago, and recently went into partnership with Tata Motors. It has also tied up with Tata Motors for construction of its new plant in Pune. There are plans to increase its supply capacity. It would render the Indian giant being dictated by the Italian company. Tata Motors has launched the Tata Nano, the world cheapest car may become a smaller partner in the partnership.