Fiat seen turning to "Plan B" after losing Opel bid

MILAN: Fiat boss Sergio Marchionne is unlikely to brood over losing his bid to take over German carmaker Opel and instead move swiftly to develop a "Plan B", analysts say.

Marchionne, who has rescued Fiat from the brink of bankruptcy in recent years, still hopes to build the group into the world's second largest automaker after Toyota.

The Canadian-Italian maverick sees the global financial crisis as an opportunity, arguing that the auto sector can only survive by forging alliances.

He has predicted that only six groups capable of producing at least 5.5 million vehicles a year will emerge still standing at the end of the crisis.

Fiat and its new ally, US automaker Chrysler, will together produce around four million units annually.

So where can Marchionne look to boost the status of Fiat-Chrysler to that of a world giant, with an annual production capacity of up to six million units?

Marchionne told Der Spiegel he was not interested in any other European partners, although Italian press reports say he has made contact with French group PSA.

Fiat also remains in the running to take over Swedish automaker Saab, another GM subsidiary.

"Marchionne has an alternative plan," said Giuseppe Berta, a professor at Milan's Bocconi University, pointing to the rapidly-growing Latin American market where Fiat already enjoys a strong presence.

Fiat has already made an offer for GM's operations in Brazil and Argentina, an industry source told AFP last week, but press reports say the negotiations are hitting snags.

Umberto Bertele, head of the business school at Milan's Polytechnical Institute, said Fiat could make "a major step" in Asia, notably in China, where it already has partnerships with local automakers, or in India where it is allied with Tata.

Marchionne's strategy is to hook up with struggling automakers propped up by government aid at a time when Fiat is doing better than the competition, even expanding its market share in Europe.

Fiat launched its project to capture Chrysler in January, clinching the deal in late April.

With the blessing of the US administration, Fiat will have a 20 percent stake in Chrysler once its bankruptcy proceedings are over, to increase later to 35 percent, in exchange for providing access to the Italian group's technology.

Fiat also has an option to take a controlling stake from 2013 if Chrysler pays off its government loans.

Opel was not sold on a similar scheme this week, with Canadian auto parts maker Magna in conjuction with Russian automaker GAZ and Russia's Sberbank coming up with the winning bid.

With characteristic frankness, Marchionne told German weekly Der Spiegel: "If Opel doesn't want us I won't get depressed. I'm not going to ask for charity."

He told reporters after a speech to some 300 financial executives in Montreal on Friday that: "If the Opel transaction is not available for Fiat, life will move on. We will continue to work with what we have.

Raffaele Oriani, an economics professor at Rome's Luiss university, said Fiat can take its time looking for another partner.

"The Opel setback won't have serious consequences," he said. "Fiat is allied with Chrysler and the group has limited damages tied to the crisis."

In any case, in order to raise new money to invest and develop, Fiat will list its automotive branch on the stock market, an industry source told AFP last week.