Fiat SpA Chief Executive Sergio Marchionne turned up the heat on talks with struggling U.S. automaker Chrysler on Wednesday as General Motors Corp confirmed a possible taker for its Saturn network.An investor group that includes private equity firm Black Oak Partners LLC and some Saturn dealers has approached GM about buying the assets of the Saturn brand and distribution network.
In late March, the U.S. auto task force rejected the turnaround plans of Chrysler and GM, telling Chrysler it had until April 30 to cement the alliance with Fiat and reach deals to cut its labor costs and debt. GM was given until the end of May to make much deeper cuts and make them far quicker than the automaker had envisioned if it wants to hold the $13.4 billion of U.S. government emergency loans it received and additional support.
Marchionne said he saw no reason why Fiat and Chrysler could not complete a proposed alliance by the end of April, a target set by the U.S. auto task force that must decide whether to provide more government aid to the Detroit automaker. "I intend to reach a good conclusion," Marchionne told reporters at a news conference in Zurich, adding that Fiat has other options as well.
Marchionne, in an interview with the Globe and Mail newspaper published on Wednesday, said a deal on the partnership had only a 50-50 chance of succeeding because of lack of progress in talks between Chrysler and union leaders. The Canadian Auto Workers union said on Wednesday that it plans to resume talks with Chrysler on Monday that have been stalled since the beginning of April. Those talks are crucial to Chrysler completing an alliance with Fiat.
Chrysler has until the end of April to forge an alliance with Fiat to qualify for long-term U.S. and Canadian government aid. The deal hinges on Chrysler securing concessions from its unions in Canada and the United States as well as an agreement with those who hold Chrysler's first-lien loans.
SATURN TAKER?
GM confirmed discussions with the investor group on Saturn and said that it had been in talks with others on the sales of the distribution network and other automakers about supplying vehicles to Saturn. It plans to update Saturn dealers on the progress of the spinoff this week or next week.
The group proposes to turn Saturn and its 440 existing U.S. and Canadian dealerships into a diversified distributorship that would start by sourcing vehicles from GM and eventually offer those from other automakers. GM has proposed to move forward with its Chevrolet, Cadillac, Buick and GMC brands in North America, either spinning off or closing Saturn along the way with 2011 as the last model year for the brand.
Separately, railroad operator CSX Corp, a major vehicle hauler in the United States, hopes for special vendor status if GM or Chrysler is forced into bankruptcy. "If any of the automakers go bankrupt, then we are hopeful that we'll get critical vendor status," CEO Michael Ward told Reuters in a telephone interview.