Re: Dreaming of a new spider

[Ryan Fellini <rfellini@domain.elided>]

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*** Earn your MBA, today, on the Alfa digest! ;] ***
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Hey George,

> > George, you're posting some incorrect info to the Digest there.
> >
> > - GM has NO option to purchase Fiat Auto (by the way, Fiat SpA is the
> >   group, Fiat Auto is a division).
>
> Technically, you're right. Its not an option, its a 'put' agreement
> between Fiat and GM

Yes, it is an agreement (contract), and it is indeed an option
(a 'put') that belongs soley to Fiat SpA.

> > - Fiat SpA has a "put" option to force GM to buy Fiat Auto (at a fair
> > market
> >   value) from 2004-2009.  This was an escape clause in the contract
> > when
> >   Fiat and GM swapped equity and is a quite common insert in order to
> >   protect the shareholder, blah blah blah...
>
> But since GM is under no obligation whatsoever to purchase the rest of
> the ailing company, In simple terms, the purchase is 'optional.'

Nope, you have some wrong info.  Under contract, if between
2004-2009 Fiat exercises their 'put' option, GM is UNDER
CONTRACTUAL OBLIGATION to purchase the remaining 80% of
Fiat Auto at a fair market value to be determined by banks
under appointment by Fiat and GM.  In other words, within
those five years Fiat can FORCE GM to buy the rest of Fiat
Auto.  The only one who has an option here is one that
belongs to Fiat.. believe me...

> > - Ferrari SpA and its Maserati division are majority owned by Fiat SpA,
> >   and have nothing to do with Fiat Auto, so GM can not say or do
> > anything
> >   with these companies.
>
> True enough. But the rumor mill has it that GM wants Fiat to reorganize
> Ferrari/Maserati INTO the Fiat Auto Group before they will discuss the
> purchase.

This makes sense only if what you thought before was true.  GM
has no rights with regard to this put option aside that of
not getting shafted on the price (fair market value).  GM has
absolutely ZERO bargaining power to even attempt to merge
Ferrari/Maserati into Fiat Auto.  Ferrari/Maserati were
explictly kept out of the negotiations when Fiat and GM made
their initial cash swap.

> > "Fiat won't be able to recover from their current economic crisis".
> >
> > If you've studied the history of Fiat, they've been *much* worse off
> > before,
> > and are no where near as bad off as Nissan was a few years ago.  They
> > have a very good chance of recovery.  Fiat putting off the investment
> > to reintroduce Alfa is not a GRIM story, its one that makes good
> > business
> > sense considering the reorganization they are under and the huge costs
> > of setting up a car business in the USA.  If you meant GRIM for us..
> > that
> > is true. :-)
>
> Things are a bit different this time. I hope you are right, and Fiat
> can rebound, but the beleaguered automaker has a couple of situations
> this time that didn't exist before. One is the simple fact that as the
> Italian populace becomes more affluent they are less and less
> interested in Fiat's bread-and-butter offerings. These Cinquecentro
> and other tiny cars simply do not appeal any more, especially since
> other offerings from the ECU, like the SmartCar are seen as better
> cars. Losing that core market and not offering compelling upscale autos
> to keep those 500 and 600 owners in the fold, has hurt Fiat badly. At
> one time Fiat made a lot of money exporting their older designs and
> their manufacturing expertise to the Soviet Block nations. The Poles,
> Cheks, Yugoslavs, and Russians all built older Fiat models under
> license. This has largely, or perhaps totally evaporated. This
> recovery, if possible, will be a lot harder.

Its not really a matter of Italians becomming more affluent.  Its
a matter of the extreme amount of choice available in Italy.  That
one company, Fiat, maintains 30% of the Italian market is amazing
in itself, and is impossible to maintain.  That is why Fiat is going
for a European/Global  market share instead of a domestic market share.
This is the meaning of a global business.  Italians in general have been
intrigued by foreign things, so they will like to try a Japanese car,
or a French car, or whatever.  It isn't, in my opinion, the same mind-
set as in America where we have a majority that go along with the
Best is US train of thought.

Anyway, what you discuss about exporting technology.  Modern
companies have compensated along the lines of their car sales
in developing countries (i.e., building the Fiat Uno for the
Indian market, etc.)

> I also believe that Fiat is making a big mistake by delaying the Alfa
> North American relaunch. This is the world's largest car market. If
> they need to sell more cars. opening up a new market is the way to do
> it. After seeing the new Punto Abarath at Concorso Italiano, I firmly
> believe that they could sell a not insignificant number of those cars
> here as well. If I were Fiat, I think that I would re-organize Alfa
> into the Ferrari/Maserati group and let Ferrari's dealer network handle
> Alfas in the USA.

This is debatable.  I tend to agree with you, but then you really have
to look at both sides of the business issue.  If they can sell cars
here like Audi and BMW, great!  But that isn't going to happen for a
long time.  The investment to get into the US, even with GM distribution
assistance, is HUGE!  Not to mention other fun things like massive
product liability suits, etc., etc.  Anyway, I think they will eventually
make it, and be successful.  Its just a bad time for them to discuss
this with the other things that must be fixed.

>
> > take care,
> > Ryan
> >
> > ps. anyone know what Autodelta charges?
>
> Spider - about $US47,000
> GTV Coupe - about $US45,000
> 166 - about - $US55,000
>
> This from the President of AutoDelta himself (a Sr, Giordano)

Holy cow!  Lets just import some used GTV 3.0 from Italy
directly!  I can't stand how Autodelta is modifying the
aesthetics on those cars.  They look close to tricked
out Civics...

take care,
Ryan
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