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The possibility
that GM and Fiat will resolve the validity of the
controversial 'put' option before a tribunal takes over
seems more and more unlikely as the two carmaker's bossed
failed to meet during last week's NAIAS in Detroit.
The implementation of a tribunal in Manhattan, New York,
will be the next step as specified by the terms under which
the option was signed back in 2000, if the two companies are
unable to resolve their differences this week. With both
parties digging in their heels, it now seems that this path
forward is becoming a very strong possibility.
Although GM's
Rick Wagoner and Fiat's Sergio Marchionne met informally
during a GM hosted conference on the sidelines of the
Detroit Motor Show, it was only to exchange pleasantries,
and a rumoured get together in Canada, a location very close
to Detroit but which is regarded as 'neutral territory'
under the finer details of the option, failed to materialise
by the time Marchionne flew back to Europe on Friday.
Yesterday he met with Fiat Group Chairman Luca di
Montezemolo, and other senior managers, at the Lingotto
headquarters to brief them on his American trip, and his
forthcoming strategy as the clock now quickly ticks down to
the opening of the 'put' option's exercise window on 24th
January.
Both Fiat and GM have remained tight lipped
over the option
with no information on any possible progress being leaked in
recent weeks. "I think our view is unchanged," said Sergio
Marchionne in Detroit last week, "We're not commenting until
the issue is resolved."
GM write down the book value of their Fiat stake to zero
GM raised the
stakes once more at the end of last week by writing down the
book value of their Fiat Auto stake to zero, a largely
symbolic accounting gesture, but one that is meant to
emphasise to Fiat that Rick Wagoner intends to play hard
ball just as much as Marchionne is currently doing.
Although the value of GM's 10 percent stake in Fiat is at
present effectively worthless bearing in mind Fiat's
financial position, this move is aimed at telling Fiat that
they have no intention of investing further in Fiat, and
that the option the Italian firm is holding, is in effect
valueless.
Fiat to face challenging market conditions during the
year ahead
While talking to
the press at the Ferrari-Maserati stand in Detroit
Marchionne was asked to comment on Fiat outlook, "I think
that 2004 is going to be in line with expectations,"he said,
continuing, "I think 2005 is going to require a substantial
amount of work on the part of the leadership to try and
deliver improvements."
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Lancia continued to defy all the pundits gloomy
predictions, by registering the best performance of
the Fiat brand's year-on-year, up by an excellent
14.9 percent, helped by the new Musa (above) which
quickly found a receptive audience |
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Fiat Group CEO Sergio
Marchionne inspects the new Ferrari Superamerica on
the occasion of its world debut at last weeks North
American International Auto Show in Detroit |
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Marchionne also made it clear that Fiat would not be
entering into any partnerships with other car makers in the
short term as it would give GM a legal stick to wield
against the Turin-based car manufacturer. "It's pretty clear
that to the extent that Fiat Auto were to carry out any
activity with its assets, certainly there's a potential that
GM will look at this as attacking the integrity of the put
option. And so it is by definition restrictive."
"I think the leadership team is committed to getting it
done," an upbeat Marchionne continued, adding "but it
continues to be a very difficult trading environment. I
think that we're happy that we've got the right leadership
team in place now. I think we need to re-establish the
credibility of Fiat as a brand," he concluded.
A solid platform
in place as Fiat's share of the European new car market
holds up last year
Meanwhile, has
been confirmed that the three Fiat Auto brands sold a total
of 1,055,602 cars and light vans across Europe last year, a
region defined as being made up of the fifteen EU member
nations, plus the EFTA signatories. This figure equated to
7.3 percent of the market and was broadly in line with 2003.
This solid result now gives Fiat a strong platform on which
to build for the future during the course of this year. The
firm's management have expressed themselves satisfied with
the result, particularly as it was achieved after a
concentration on more profitable retail sales, which in fact
rose by 7 percent last month across the major European car
markets. It also reflects pleasingly with the 2003
performance that was distorted by government incentive
schemes designed to get people into new cars.
European car
buyers continued to keep faith with Fiat products, with
eight models sitting firmly within the top ten best sellers
in their particular segments. These included the Fiat Panda
(best seller in A-segment), the Seicento (still built in
Poland, and selling steadily), as well as the Punto, Stilo,
Idea, Ulysse, Doblo, and from Lancia, the Musa 'mini-MPV'.
Lancia satisfyingly continued to defy the pundits gloomy
predictions, registering the best performance of the three
brands year-on-year, up an excellent 14.9 percent. Last
month they rounded out the year with a 20.7 percent rise.
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