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Will they be able to turn it into a positive, or will this really hurt the General?

Some of the analysts I have seen quoted differ on how bad they think the impact will be. Some seem to think it could be devastating to GM, since they would lose a lot of capital in the deal. Also, Fiat is in as bad of shape as Opel is, and competes directly with Opel. GM would have two European brands in direct competition with neither one making money.

Other analysts feel the price to acquire Fiat would not be that high, and with GM’s size it would not be a devastating economic blow. They would have to turn things around, and probably do major cost cutting as they are at Opel.

I would think the immediate negative impact could be offset by future returns. If they can return it to solvency it would give them a bigger position in Europe. They may be able to take it in a different direction than Opel is too, in order to differentiate its products. It would take a lot of work and investment, but they could do it. They have managed to start making big money off Daewoo in Asia which nobody thought was possible.

Related Article: http://www.usatoday.com/money/autos/2004-12-15-gm-fiat-mediation_x.htm
 

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If they buy out Fiat, aren't they also getting Ferrari, Masarati, Alfa Romeo and Lancia? I'm not sure that all these brands belong to Fiat, but some do, and that would have to be factored in to the value of the aquisition. If I recall right, Fiat has pretty good market share in third world markets too, and many of these markets are expanding. I don't think any other GM holdings do as well in the third world. You're right though, the market is rough in Europe. That's why all these European brands are messed up and ripe for the picking. Question is though, when is it better to let them die on the vine.

In my opinion, stop all the globe trotting and just focus on making the best Chevys and Pontiacs, etc. that they possibly can. Toyota is the most profitable car company in the world bar none. They make GM profits look like a joke. GM has to ask themselves, how many over seas car companies has Toyota aquiered? Hmmm....
 

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I am not sure how the deal works out exactly regarding the other brands, but they would not get some of them, and possibly not any of them.

I am fairly certain Ferrari and Masarati are not part of the deal. Alfa and Lancia may not be either, although I am not positive on that. They could be part of it.
 

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notgonnahappeninamillionyears.com is available :cool:
 

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Yeah, GM's financial adjustment that came out today wasn't a very happy adjustment.

GM also expects negative operating cash flow in 2005 of approximately $2 billion, before the Fiat settlement and GM Europe restructuring, versus the previous target of positive $2 billion.
 

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Wow now that is a lot of cash to lose! A $4 billion difference from what was predicted and what they will end up with!
 
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