MAY 29, 2002

Fiat could sell its car division

ALTHOUGH it will have no effect on Ferrari, the giant Italian firm Fiat could sell its loss-making automobile operations to General Motors. The Americans already own 20% of Fiat Auto Holdings, a Fiat subsidiary, but Ferrari is a separate company which the Agnelli Family says it intends to hold on to.

The Fiat empire was built on cars but the poor performance of the Fiat, Alfa Romeo and Lancia brands have meant that the business is losing money and pressure is on Fiat to sell. Selling off Fiat might actually work in Ferrari's favor. The Fiat company is seen as part of Italy's heritage and if it had to be sold the passion that exists for Ferrari would increase accordingly.

At the moment the Agnelli Family says that it intends to hold on to Fiat Auto and restructure it back to good health but for the first time Umberto Agnelli has indicated that the business could one day be sold. Umberto's brother Gianni Agnelli is against a sale but he is now old and unwell.

The big question remains whether or not General Motors wishes to take up the option that exists to buy the rest of Fiat Auto, as Italy's labor laws make it very difficult for the company to be turned around.