9 February 2005

Tensions continue to rise in Italy over Fiat’s attempts to invoke the controversial option which would force General Motors to buy the troubled brand outright, with unions considering strike action over the uncertainty.

The threat of a court case looms larger than ever after the two car makers failed to reach an agreement by last week’s deadline. GM is arguing that the arrangement is no longer valid as its share in Fiat has been diluted by the Italian’s restructuring as part of its survival plan, which Fiat denies.

The option to buy was agreed in 2000, when GM took a 20 per cent stake in a Fiat that was in a far healthier financial state than it is now. GM’s own precarious financial status in Europe means it wants to avoid taking on another struggling brand and according to experts, it will either pay Fiat around €1bn (£69m) to negate the option, or take its chances in court. Whatever the outcome, joint ventures such as the new Croma family car (above) would be unaffected.

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