General Motors chief executive Rick Wagoner on Tuesday said that GM has no plan to take part in Fiat SpA (FIA) unit Fiat Auto’s recapitalisation, but said he wouldn’t rule it out, Dow Jones reported.
The news agency noted that GM has a 20% stake in Fiat Auto, which is losing millions as it struggles with costs, quality problems and a lack of new products. Fiat SpA, the car arm’s parent company, holds a put option which can force GM from January 2004 to buy the 80% of Fiat Auto it doesn’t own.
Many industry experts expected GM to try to renegotiate the put option and inject fresh capital into Fiat Auto as a compromise, Dow Jones said.
However, Fiat last week said it would recapitalise Fiat Auto with another EUR3 billion, but GM’s involvement was conspicuous by its absence, Dow Jones noted.
Wagoner wouldn’t be drawn on whether he would rather inject fresh money into Fiat Auto now, instead of buying the rest of the ailing car company next year, Dow Jones said.
“We are not going to speculate on this outcome – it serves no purpose,” Wagoner said, according to Dow Jones.
Wagoner, speaking to Dow Jones at the Geneva Motor Show, said GM is constantly talking with Fiat management but there is no agreement other than the initial pact.
“We are not involved with the recapitalisation of (Fiat Auto). I don’t rule it out, but we have no plans at the moment,” he said, according to the news agency.
Wagoner told Dow Jones that Fiat’s plan to cut costs and improve models is showing “early signs of success.”
He said Fiat’s pricing war – started by GM, which has been since copied by rivals – isn’t a long-term policy, but rather a measure to nurse sales through a period of economic weakness.
“It worked well, it brought people into the market,” he told the news agency.
According to Dow Jones, Wagoner predicted this price pressure will become more widespread in Europe, where GM owns Adam Opel AG, Saab and Britain’s Vauxhall.
“The pricing environment is starting to move to that of the US, where it’s brutal,” he told Dow Jones.