SEPTEMBER 20, 1999

Gossip in Frankfurt

THE bosses of the world's car manufacturing companies gathered last week at the Frankfurt Motor Show and it is expected that meetings taking place during the show will result in a new round of mergers and takeovers in the industry. There is no doubt that the predators are Ford, DaimlerChrysler, General Motors and Volkswagen and that the targets are Peugeot, Fiat and BMW - all three of which are involved in Grand Prix racing.

The strongest rumors at the moment continue to link DaimlerChrysler with a takeover - friendly or otherwise - of the PSAÊPeugeot Citroen group as a means of breaking into the small car market and strengthening the German company. Last week there was a significant move within DaimlerChrysler when the boss of the Smart car division Lars Brorsen resigned, citing differences of opinion with the company over future policy. A takeover of Peugeot would also stop the French company moving into the Mercedes market with the newly-announced Peugeot 607. Peugeot is controlled by the Peugeot family which owns 22.6% of the shares. The public owns 60%.

Volkswagen is still tipped to be the company most likely to get its hands on BMW while General Motors is looking at increasing its European sales dramatically by a European marketing drive and, perhaps, by a takeover.

Our spies tell us that GM is looking even more closely at a future Formula 1 program to support a market drive in Europe and that the matter will be discussed again soon when the company has done some more research about the impact of F1 racing.