Yesterday Fiat and General Motors finally dissolved their powertrain and join purchasing ventures, with a separation agreement that was signed in the Dutch capital, Amsterdam. All assets and intellectual property have now been returned to their respective owners, GM has paid the final installment due to Fiat, and the Italian firm is free to pursue fresh automotive alliances.

The week also saw Fiat Group shares given a welcome boost after the giant US investment bank JP Morgan announced it was overweight with Fiat shares and gave them an 8.50 euro target.

FIAT AND GM SIGN SEPARATION AGREEMENT

GM issued a statement yesterday confirming that the final installment of US$707.74 due to Fiat had been paid.

The two companies will still retain certain links, with GM continuing to have access to Fiat's leading technology diesel engine range, and Fiat in turn able to call upon a variety of GM's petrol powerplants. Platform sharing will also continue in the short-term, while GM will retain a 50 percent stake in Fiat's Polish diesel engine production plant. Otherwise, the agreement now closes the door on this partnership and leaves the Italian firm free to pursue new arrangements with rival car manufacturer's.

GENERAL MOTORS STATEMENT - 13.05.2005

"Fiat S.p.A. and General Motors Corp (NYSE: GM) today signed in Amsterdam a separation agreement which dissolves the purchasing and powertrain joint venture companies formed in 2000, The statement issued by General Motors read. "The formal unwinding of Fiat-GM Powertrain and GM-Fiat Worldwide Purchasing was executed as scheduled by Fiat and GM in an earlier agreement.

"According to the Termination Agreement, signed in New York City on February 13th, 2005, GM has completed the payment to Fiat as provided in the earlier agreement. Fiat and GM regain ownership of all assets they respectively contributed to the powertrain joint venture when it was formed. Fiat and GM have also signed cross-supply agreements for engines and transmissions both in Europe and Latin America. The companies also agreed to establish procedures aimed at enhancing the savings on jointly developed vehicle architectures.

"Other ancillary agreements address the joint ownership of intellectual property, for example, the joint ownership of 1.9 liter diesel engine technology. The GM statement then concluded, "Fiat and GM each maintain a 50 percent interest in the powertrain manufacturing plant in Bielsko-Biala, Poland, which currently produces the 1.3 diesel engine and under a new joint venture agreement the companies will continue to operate the facility as a 50/50 joint venture."
 

FIAT SPA STATEMENT - 13.05.2005

"Fiat S.p.A. and General Motors Corp today signed in Amsterdam a separation agreement which dissolves the purchasing and powertrain joint venture companies formed in 2000," read Fiat's statement. "The formal unwinding of Fiat-GM Powertrain and GM-Fiat Worldwide Purchasing was executed as scheduled by Fiat and GM in an earlier agreement.

"According to the Termination Agreement, signed in New York City on February 13th, 2005, GM has completed the payment to Fiat as provided in the earlier agreement. Fiat and GM regain ownership of all assets they respectively contributed to the powertrain joint venture when it was formed. Fiat and GM have also signed cross-supply agreements for engines and transmissions both in Europe and Latin America. The companies also agreed to establish procedures aimed at enhancing the savings on jointly developed architectures.

"Other ancillary agreements address the joint ownership of intellectual property, for example, the joint ownership of the 1.9 liter diesel engine technology. Fiat and GM each maintain a 50 percent interest in the powertrain manufacturing plant in Bielsko-Biala, Poland, which currently produces the 1.3 diesel engine and under a new joint venture agreement the companies will continue operate the facility as a 50/50 joint venture," the Italian firm's stock market statement concluded.

BOOST AS JP MORGAN RATE FIAT SHARES

Meanwhile investment banking giant JP Morgan handed Fiat a timely boost after it post an 8.50 euro target on its share price.

A mid-week statement from the US banking concern, issued shortly after Fiat released their quarterly report, announced that they would be remaining 'overweight' with Fiat shares, with a target price more than three euros above the current price.

JP Morgan were 'impressed' at the important low operating gearing ahead of the planned debut of four important new models this summer, the Fiat Croma and Punto, and the Alfa 159 and Brera. They respected Fiat CEO Sergio Marchionne's clear-cut approach to resolving the carmaker's situation, and for disclosing Fiat Auto's 2005 budget. The bank regarded liquidity as being 'under control' while cash flow was 'on the light side' due to CNH Global, but is comfortably within seasonal trends.