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Car industry shake-up looms as Fiat eyes Opel
(Agencies)
Updated: 2009-05-04 23:46

BERLIN/MILAN – A radical overhaul of the car industry moved a step closer on Monday as Fiat's chief executive set his sights on General Motors' Opel German unit just four days after clinching a deal with Chrysler.

Car industry shake-up looms as Fiat eyes Opel
A Fiat Panda is parked next to a Jeep Wrangler (L) at a Chrysler dealership in Rome April 30, 2009. [Agencies] 

Sergio Marchionne sought government support for an ambitious plan to swallow up GM's European operations to create a listed European automotive giant, while debate over the ownership of Germany's Porsche AG intensified.

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Germany's finance minister, Karl-Theodor zu Guttenberg, said Fiat's plan was "interesting" but needed a closer look following talks with Marchionne. Guttenberg said Fiat was seeking Europe-wide state guarantees as part of the GM Europe deal.

Fiat shares rose 7 percent by 1320 GMT (9:20 a.m. EDT) as the market welcomed the prospect of a spin-off.

In fresh reminders of the dire state of the global auto industry, French new passenger car sales fell 7 percent in April and Belgium reported a 22.8 percent drop.

Spanish automaker association Anfac said car sales in the country fell 45.6 percent in April, declining faster year-on-year than in March, which saw a 38.7 percent drop.

"The spin-off of the auto group has always been an option prized by the market because it brings out the stand-alone value of the auto business without the built-in discount that comes from a conglomerate like Fiat," Cassa Lombarda analyst Serge Escude said.

Survival plan

Combining with Chrysler as well as Opel, which makes up 80 percent of GM Europe's annual sales of $34.4 billion, fits Marchionne's strategy of bulking up Fiat to survive the crisis engulfing the auto industry.

In Detroit, Chrysler asked the US Bankruptcy Court for a swift hearing into its planned sale to Fiat, a proposal that brought immediate objections from some secured lenders.

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