09.08.2003  FIAT BOOSTED BY INCREASE IN DOMESTIC MARKET JULY SALES AS TALKS OPEN WITH GM OVER 'PUT' OPTION

Fiat was boosted by an unexpected rise in the Italian new car market in July, up by 7.9%. Although Fiat underperformed the market, up 5.2%, it allowed the Italian market leader to claim a 28.7% share, up from June's historic 27% low.

However analysts were open minded if a corner had been turned. Although the new Punto has hit the showrooms, aggressive marketing strategies, including 0% finance deals on Seicento and Panda models as Fiat attempts to shift stocks before next months replacements come on stream, coupled with a mini-surge created by buyers looking for a new car before heading off on holiday, may well have distorted figures.

TALKS OPEN WITH GM OVER 'PUT' OPTION

A spokesman for General Motors announced yesterday that talks would be opened with Fiat over its 'put' option which the US giant carmaker believes has been invalidated by a series of actions taken by the Italian company since it was signed, including additional banking investments to stem cover losses, several restructuring plans and a capital rights increase which GM declined to take up.

The 'put' option was gained by Fiat when they sold a 20% stake to GM in 2000, allowing the option of forcing GM to purchase the remaining 80% from 2004 onwards. This clause has been clung onto by the creditor banks, who have resisted attempts to negociate it away, and seen as an important 'get out of jail' card.

US INVERSTORS REDUCE HOLDINGS

GM also announced that due to its non-participation in July's capital increase proposal, its stake in the Italian industrial group had now been reduced to 10%. Meanwhile Southeastern Asset Management, a US investment fund, which had held 12.45 million Fiat American Depositary Receipts, equating to 2.8% of capital and 2.3% of voting capital, announced to the US exchange earlier last week that it had sold the entire stake days after the €1.8 billion rights issue was unveiled. The action comes hard on the heels of the disposal of a 7.6% stake by another US investor, Dodge & Cox.