Fiat already looking beyond Chrysler to Opel

MILAN: Italian automaker Fiat, not satisfied with a deal with ailing US giant Chrysler, already has its sights on Germany's Opel in the conviction that bigger is better in the midst of the global economic slump.

Fiat boss Sergio Marchionne, credited with bringing Fiat back from the brink of collapse, said as much in January with the announcement of a preliminary accord with Chrysler -- that it was just a "first step" in a grander plan.

"Marchionne is convinced that the time is ripe for the sector to consolidate at the international level," said Umberto Bertele, head of Milan's business polytechnic.

The Fiat boss outlined his vision in December after having insisted that only targeted alliances -- such as with PSA Peugeot Citroen of France or Indian group Tata -- were viable following Fiat's "divorce" from US giant General Motors in 2005.

The global financial crisis has changed the dynamics for automakers, who will have to create alliances to survive, Marchionne said in December.

He predicted that only six groups would emerge from the crisis capable of producing at least 5.5 million units per year, asserting that Fiat intended to be among them.

The group's current production is a little over two million, similar to Chrysler's -- so Marchionne is clearly envisioning a significant expansion.

While Fiat refuses to comment on the subject, it has informed the German government of its interest in Opel, a GM subsidiary, according to German Economy Minister Karl-Theodor zu Guttenberg on Tuesday.

But it will not be easy, with many political and union figures hostile to Fiat, preferring another candidate, Canadian group Magna.

Italian news reports frequently mention a possible hook-up with PSA.

Virtually unknown when he took the helm of Fiat in 2004 when the group had been in the red for several years, Marchionne, 56, has become one of the world's most visible captains of industry.

On the Milan stock market, Fiat's share price has surged 75 percent since the start of the year because Marchionne is considered "as good as his word," according to the Italian financial daily Il Sole 24 Ore.

"Its revival is strongly linked to Marchionne," said Raffaele Oriani, an economics professor at Rome's Luiss University.

"He completely reorganised the management, brought in younger people, simplified the process of developing models and invested in technologies that are more respectful of the environment," Oriani told AFP.

Before, "Fiat lost market share, its technologies were no longer up to date, the design of new models left something to be desired and they were perceived as being of poor quality," he said.

Since 2005, when Fiat returned to profit, "the perception of Fiat on the market has completely changed," Oriani said, adding: "A very clear signal of the change is that Fiat is obtaining a share in Chrysler without spending a euro, in exchange for its technology."

But does Marchionne risk overreaching?

Oriani advised "a more gradual approach. Wait a little and consolidate Chrysler first."

Other constraints include a lack of cash and the group's 6.6-billion-euro (8.7 billion dollar) debt, Bertele said.