Fiat could buy Vauxhall and Opel

The German government has refused to take a stake in OpelItalian carmaker Fiat is in talks about buying the European business of General Motors (GM) – which includes the UK’s Vauxhall and Germany’s Opel.

Fiat is already trying to takeover some of Chrysler, the US carmaker that has applied for US bankruptcy protection.

And it said it was considering merging its carmaking business with those of Chrysler and GM Europe.

Saab is also part of GM Europe, but may not be part of the discussions as it is being reorganised under Swedish law.

‘Ideal partner’

A top Fiat official will meet German government ministers on Monday to discuss the bid for Opel.

Fiat chairman Luca Cordero di Montezemolo said Opel would be an “ideal partner” and that a takeover was an “extraordinary opportunity”.

GM faces potential bankruptcy in the US and has until 1 June to restructure.

Opel has said it needs 3.3bn euros (£2.9bn; $4.3bn) to get through the economic crisis, but the German government has encouraged it to find an investor.

It has said it does not intend offering Opel a bail-out, but that it would offer investors state support.

Mr de Montezemolo told Italy’s Corriere della Sera newspaper on Sunday that a Fiat takeover of Opel would create “a very strong group”.

Group CEO Sergio Marchionne will meet the German economy and foreign ministers on Monday to assess the viability of a deal, Fiat said.

GM challenge

In an interview with the Financial Times, Mr Marchionne said that such a move would be a “marriage made in heaven”.

However Canadian car parts maker Magna International has also put forward what the German government has called a “rough concept for a commitment with Opel”.

German Economy Minister Karl-Theodor zu Guttenberg said that any investor would have to present a plan that kept Opel plants open in order to secure government support.

Last week General Motors (GM) said it was to cut 21,000 US jobs in 2009 and phase out its Pontiac brand, as it aims to meet the deadline set by the US government to overhaul its business and show that it is viable.

It must complete its restructuring by then to gain the government loans it needs to avoid bankruptcy protection.

Like US rivals Ford and Chrysler, GM has seen sales fall sharply in its core home market in recent years, a decline that has intensified as the recession has continued.