Fiat shares opened up 7 percent at 4.64 Euros, following a newspaper report on a plan to merge with PSA, Reuters reports. The Il Sole 24 Ore newspaper said Italian investment bank Mediobanca has drawn up a report together with a strategic consultant on merging the two companies, and that Fiat Chief Executive, Sergio Marchionne, had yet to decide if or when to present the plan to the board.

A few hours later, Reuters came out with the story that Fiat’s board is not considering a plan to merge with another car maker. How could they, if Sergio is still sitting on it? Fiat then put out a statement saying that they are still interested in collaborating with other car makers to cut costs and enter new markets: “No proposal for a merger with another automotive group is currently under consideration. It is a known fact that Fiat frequently examines opportunities for agreements of various types which would offer it operational synergies and access to new markets.” And what’s Paris saying to the advances?
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One of the first things you learn in the auto industry is that if you run your plant at less than 80 percent of capacity, your plant and your career are in deep trouble. If that adage holds true, then the world is in for a world of hurt.

At the moment, most automakers are believed to be running their plants at less than half capacity in an effort to reduce inventories, which have been piling up since last fall, says the Nikkei [sub]. They either get used to it; or close a lot of plants.
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Yesterday, we mentioned that GM Europe Chief, Carl-Peter Forster, must have missed his daily dose of Prozac. He had sounded a bit depressed when he said that there were “interested parties but no formal talks” in regards to a partial sale of Opel. Today it turns out that this was the understatement of the week. Opel is the wallflower of the industry. One by one, those alleged “interested parties” hold their nose and say a muffled “no thanks.”  The German Autohaus chronicles the list of rebuffs:

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Martin Winterkorn, chief of Volkswagen, was asked by Automobilwoche [sub] who will be left standing when the big carmageddon—ooops—consolidation will finally be over.  Here are his odds:

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One of the signs that a new technology has matured is when whole industries are worried about getting wiped off the earth as a result of that new technology. If that happens, change has finally arrived.

Industries are getting worried about electric vehicles. The machine-tool sector is very troubled, writes the Nikkei [sub], and it is worried for two reasons: “Plummeting demand from recession-hit clients is threatening the industry’s very existence, as the increasing focus on electric vehicles by ailing carmakers could eventually eliminate the need to machine parts for engines.” And why would that be?
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Things are either rapidly falling apart for Chrysler in China. Or someone is tidying up for the rumored asset transfer to Beijing Auto. Place your bets.

Anyway, China’s Great Wall Motor has terminated its small-car joint venture project with Chrysler, Gasgoo reports. Why? “Due to changed situations,” said Great Wall’s president Wang Fengying.

Chrysler had signed a memorandum of understanding with Great Wall Motor in July 2008 to explore the viability of a long-term strategic relationship. The two companies have since developed an A-class car model that was scheduled to be produced by Great Wall and sold around the world as a rebadged Chrysler. What now?
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Volvo is a step closer to salvation, while Saab is a step closer to damnation.

According to Germany’s Handelsblatt, the European Investment Bank (EIB) has approved a €445M loan to Volvo, after the Swedish government gave a guarantee for 90 percent of the loan. This cash injection should buy Volvo some time to restructure and to pretty-up for a sale. According to Financial Times, Ford has begun seeking indicative bids for Volvo. The sale process is expected to last until late in the year. Three people involved in—or briefed on—the sale say Volvo has drawn tentative interest from at least three Chinese carmakers. Talks have also been held about forming a Swedish-led investor consortium amid concerns among some in Sweden’s motor industry about the possible leakage of intellectual property to China.

Totally different (downright ugly) picture at Saab.

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The German government doesn’t seem to be in an awful hurry to bail out Opel. First, Berlin bitched about the quality of GM Europe’s rescue plan which was submitted last month. According to that plan, the German unit, along with its UK-based Vauxhall unit, would be partly spun off. Along with that, state aid to the tune of €3.3B ($4.2B) was requested. Berlin said the plan was interesting but mostly fluff. They demanded another one; it hasn’t arrived. No plan, no money.

And just in case a better plan would be forthcoming, Chancellor Angela Merkel set the bar a bit higher. “Before we decide (on aid), we must know important decisions in the United States; for example, how things proceed with Opel’s parent company General Motors, what independence General Motors can give Opel, what happens with Opel patents,” Merkel said, according to Reuters. That’s a whole bunch of important decisions to be taken before any money is being given.
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When China reported January sales that were higher than in the US, detractors said: “Yeah, but China was down also.” To be exact, in January, China was down 14.35 percent, while the US had declined 37.1 percent.  Old China hands pointed out that the January sales numbers were exceptional, given the fact that there was a complete sales week missing in January, due to the early start of the Chinese New Year, where all of China is shut, closed, guan. Some of the same old China hands prognosticated that due to the same fact, February might be a roaring success. But who listens to old China hands? Okay, folks, listen up:

China vehicle sales surged 25 percent in February, the first gain in four months, Bloomberg reports. Sales of passenger cars, buses and trucks climbed to 827,600, the China Association of Automobile Manufacturers said today in Beijing.

And why would that be?

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“Enough’s enough” said Philippe Maystadt, the European Investment Bank president. Or words to that effect. Anyway, this Monday the banker signaled that the institution was approaching the limits of its support for the car industry.

Speaking at the bank’s annual press conference, and chronicled by the Financial Times, Maystadt confirmed that the EIB planned to authorize €7B in loans for car makers in the first half of the year, with most of the funds to develop clean cars.

But he warned carmakers—who have asked the EIB for some €40B in low-interest loans—that they had better look elsewhere, because the EIB doesn’t want to be over-exposed to the perilous industry. “It would be a mistake to concentrate a too big part of our lending on one sector,” Maystadt said. The auto industry already accounts for more than 10 percent of its €66 billion in expected lending this year.

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Chrysler was actually the first joint venture in China, (dis)gracing the Chinese landscape with countless Cherokees. And this is where Chrysler might end up. Beijing Auto, a state-owned automaker that makes Hyundai, Mercedes and a few local brands, has “set up a work team in charge of the acquisitions and restructuring affairs, which will mainly involve its merger of a smaller Chinese carmaker Fujian Motor and purchase of US auto giant Chrysler’s assets,” Gasgoo reports. The reports are quite detailed, this time:

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Susanne Klatten, Germany’s wealthiest woman, and a member of the Quandt family—the leading shareholders in carmaker BMW—bid good-bye to a former lover. Helg Sgarbi was jailed for six years on Monday for trying to blackmail (with secret video of their lovemaking) the heiress to the BMW car empire, Reuters reports.

Helg Sgarbi admitted that he had seduced heiress Susanne Klatten and three other wealthy women, persuading them to pay him almost 10 million euros ($12.64 million). Klatten went public last year with the story of how her lover secretly shot intimate footage and later demanded tens of million of euros not to reveal it. Sgarbi’s admission spared Klatten, who is rarely seen in public, a court appearance.
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German newspaper Die Welt had reported on Saturday that GM and Opel seems to be preparing for insolvency at Opel, having hired three law firms with renowned insolvency experts. GM denies the report, writes Reuters. “This scenario is currently not on the agenda,” a GM Europe spokesman told Reuters on Sunday. Note the careful usage of “currently” and “agenda.”

Die Welt says GM Europe would be advised by Baker & McKenzie as well as Clifford Chance, while the management of Adam Opel GmbH had hired Heidelberg-based firm Wellensiek. GM doesn’t deny that they have hired counsel: A GM Europe spokesman said the company had hired the firms to assess the effect of potential restructuring measures. Meanwhile, there is growing outrage in Germany about the fact that Opel never paid tax in Germany because it transferred profits to its U.S. parent.
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China’s top economic planner has approved of Chery’s plan to buy the Volvo brand from Ford Motor, Gasgoo says. The report is not confirmed yet by Chery Auto. However, Gasgoo is very close to Chery.

According to Chinese media reports, Dongfeng Motor Co. has also submitted its Volvo-bidding plan to the National Development and Reform Commission (NDRC). The company’s spokesman denied the reports.

On Feb. 12, Chery Auto president and CEO, Yin Tongyao, said that his company would not rule out the possibility of buying a troubled European auto brand. Volvo was believed to be one of the choices.

Chery Auto received a 10 billion yuan ($1.47 billion) loan to fund its global growth from Export-Import Bank of China (China Eximbank) in December 2008. The company was also granted the flexibility of a credit line by the bank.

Ford put Volvo up for sale late last year to raise cash, but has found little interest in the brand, because many potential buyers are facing similar crisis and the nearly $6 billion needed for buying Volvo is a prohibitive price for most carmakers.

The report has been repeated on China Daily. China Daily is the English speaking organ of the government news agency Xinhua.

An overview of what happened in other parts of the world while you were in bed. TTAC provides round-the-clock coverage of everything that has wheels. Or has its wheels coming off. This column will be filed from Berlin until further notice – if & when time allows.

We are the German government, and we are here to help you, Opel: The German government is still waiting for Opel to hand in a solid business plan that could be the basis of financial assistance. What Opel has submitted so far has been found inadequate. Finance Minister Steinbrueck today put Opel on notice that without solid information there will be no money decision. Volker Kauder, head of the CDU faction said: “It looks like they need help to come up with a concept. We’ll help ’em.”

Saab? Volvo? Bu yao! Chinese automakers Dongfeng and Geely said that they have not held any talks over a possible bid for General Motors’ Saab brand, Gasgoo says. A Dongfeng spokesman as unaware of any interest by his company in bidding for the Saab brand. A senior Geely executive, when asked about his company’s possible acquisition of Saab or other brands, told reporters: “No, we did not. We’re not interested in Saab or the other brands out there.” Media reports have also said Geely was in preliminary talks with Ford Motor about the sale of the US automaker’s Volvo car unit. This was likewise denied by Geely. This comes on the heels of the Chinese government warning their automakers to buy overseas assets.
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