The GM - Fiat deal

FORMULA 1 is not expected to be affected in any way by the deal agreed last week between General Motors and Fiat. GM agreed to give Fiat a 5.1% shareholding in GM in exchange for 20% of Fiat Auto and an option to buy the company outright if the Agnelli Family decide to sell it between 2003 and 2009. The Agnellis control 30% of Fiat Auto through various holding companies. The deal - worth $2.4bn - is designed to save the two companies $1.2bn a year in the first three years of the agreement and $2bn a year by 2005. The savings would be produced by joint ventures in research and development, engine production and reductions in purchasing costs. As part of the deal Fiat may re-enter the US market with the sporty Alfa Romeo brand (which was withdrawn from the US in 1995).

Both companies were keen to stress that the deal would not affect their independence. The deal does not include Ferrari (or its subsidiary Maserati) as the two sportscar brands are owned by the main Fiat company rather than by Fiat Auto.

The deal adds to the pressure on DaimlerChrysler which has been trying hard to reach agreement with a small car producing company. The deal means that the German company has only one choice left in Europe - Peugeot. A takeover of the French car firm by DaimlerChrysler could have interesting side-effects in Formula 1 where Alain Prost is keen to end his relationship with Peugeot in order to get Mercedes-Benz engines. A takeover of Peugeot would mean that he would not need to as Peugeot could rebadge the competitive Mercedes-Benz V10s.

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