- The Washington Times - Friday, May 8, 2009

MILAN, Italy | Fiat Group CEO Sergio Marchionne will become the chief executive of Chrysler after the U.S. automaker emerges from bankruptcy, a Fiat spokesman confirmed Thursday.

Mr. Marchionne, the 56-year-old dual Canadian and Italian citizen, has been tipped for the job since the Italian automaker reached a deal to take a 20 percent stake in the bankrupt Chrysler. Chrysler CEO Bob Nardelli has said he would step down when the bankruptcy is complete, which would make room for Mr. Marchionne.

The Obama administration has said Chrysler could come out of a “surgical” bankruptcy in 30 to 60 days - much more quickly than usual.

Mr. Marchionne, meanwhile, also is in talks to take over General Motor’s operations in Europe - Germany’s Opel, Britain’s Vauxhall and Sweden’s Saab, and Fiat confirmed that it is also interested in GM’s Latin American operations.

Mr. Marchionne’s vision to create the second largest automaker in the world and the largest in Europe has startled analysts, who wonder whether he can pull it off. Mr. Marchionne, who returned the loss-making Fiat to profitability since taking over as CEO in 2004, has said that automakers will need to made about 5.5 million autos a year - more than twice Fiat’s current production - to survive.

“In a way, all of this has come a little bit too fast,” said Howard Wheeldon, a senior strategist at BGC Partners. ” One would like to see two or three years of really strong results in Europe and in Italy for Fiat before they delve out this far and fast. I am extremely worried about this German thing and their wanting to become No. 2 in the world. It will end in tears.”

Fiat’s vision is to spin off Fiat Group Automobiles, which includes the Fiat, Lancia and Alfa Romeo brands, to create a new car company including Chrysler, GM Europe and, now, GM’s Latin American operations. Fiat said the new company would make more than 6 million cars.

Unlike the Chrysler deal, where Fiat assumed no debt, Fiat said talks in Germany include assuming Opel’s debt.

Mr. Marchionne, who was in the United States for talks with GM executives, was to depart Thursday for more talks in Germany.

He met Monday with German Chancellor Angela Merkel and her economic minister, Karl-Theodor zu Guttenberg, who said Fiat is seeking up to $9.3 billion in short-term financing from governments in countries where GM Europe operates.

Meanwhile, General Motors drew closer to bankruptcy Thursday, acknowledging that its revenue fell by nearly half as car buyers worldwide steered away from showrooms for fear that the auto giant would not be around to honor its warranties.

The company lost $6 billion in the first three months of the year. The results were bad enough to bring a warning from Chief Financial Officer Ray Young, who acknowledged the difficulty of climbing out of a steep decline even if the company cuts costs.



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