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The Big Yellow Book

Seeing the World from Both Oculars-- a Bananaslug's Journal

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Another Automotive Industry Fail???
From the Financial Times:

Fiat CEO Sergio Marchionne wants Italy's largest industrial group to separate Fiat Auto from its other divisions, join them with Opel/ Vauxhall, Saab, and GM's other European operations, as well as Fiat's stake in Chrysler, to create a publicly traded company that would be second only to Toyota in revenues and sales and roughly the size of Volkswagen, report John Reed and Paul Betts.

"From an engineering and industrial point of view, this is a marriage made in heaven," Marchionne says. He is scheduled to present his plan to German government leaders Monday afternoon in Berlin. Fiat's move could spark further consolidation among competitors, but is likely to face political opposition in Germany.

If it clears antitrust, political, and other hurdles, the group would marry GM Europe's 10 plants to Fiat's 11 to create a pan-continental powerhouse that, with Chrysler, would be a big force in Europe, North America, and Latin America.

So let me understand this. Marchionne wants to take a very weak company (Fiat) with a stake in a weaker company (bankrupt Chrysler) and merge it with a really big weak company's European operations (GM's Opel, etc...) and somehow with the appropriate addition of blue smoke and mirrors turn it into the second largest automobile company in the world.


This sounds vaguely like packaged derivatives. You know, where bankers and insurance companies put steaming dog messes into pretty boxes, and wrapped them with gorgeous paper and bows and sold them as gilt edged securities...

But wait!

That's how we got into this mess.

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Oh good. It isn't just me who went "Huh?" when I read this. There I was thinking I was the stupid one...

I was trying to figure out where the "Oh, by the way, we want GM's European stuff to" came from. Greedy fscker.

So it's now "Finance It Again, Tony"? I really don't see anything good there. Saab should be able to survive by itself and so should a consolidation of Opel, Vauxhall, and the rest of GM's European operations - though I suspectGM would retather keep then for certain reasons, much as Ford of Europe looks to be providing some veryh useful tiems to Ford/US.

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