"The market value of Italy's Fiat, long regarded as the basket case of the European motor industry, has passed General Motors, the world's biggest carmaker by number of vehicles sold, for the first time on record," reports James Mackintosh in the Financial Times today. "The shift demonstrates both the scale of the crisis at GM and the rapid return of investor confidence in Fiat. Just two-and-a-half years ago GM was worth more than seven times as much as Fiat and was expected to buy the Italian company's carmaking division. But Fiat is now worth €10.7bn, or $12.87bn, against GM's $12.67bn, adds the Financial Times report.

The value of the Fiat Group compared to US giant GM is a remarkable vote of confidence in the turnaround programme currently being undertaken by the Italian carmaker, and in particular in their hard-hitting CEO Sergio Marchionne who has imposed is own brand of ideas and values on the firm since he took over running the industrial group. In fact one of his early strategies was to undone the restrictive alliance that existed between Fiat and GM, and negating the controversial 'put' option after receiving a substantial payoff from the American firm. Disposing of non-core assets, reshuffling senior management and bringing a new outlook to the firm, along with exciting new models - such as the new Fiat Grande Punto - mean that the struggling Auto Division is set to return to profitability at the end of this year.
 

Meanwhile, the Fiat Group's intention to make a return to the bond markets has received a welcome boost from Guy Deslondes, the Director for Italian Corporate Credit at giant US credit rating agency Standard & Poor. The Italian carmaker's 'BB-' credit rating should prove to be no hindrance to a bond issue said Deslonde,s who was impressed that a recent much improved operating performance had seemingly removed concerns over liquidity. "2005 has already been a positive year for Fiat, based on operating results. 2006 can be more positive," he added. Marchionne told reporters recently that Fiat would return to the bond markets after a recent absence, but only when the conditions were right, and offered no timetable.