LUCA CIFERRI

A car plant for 1 euro may seem like a bargain, but is it?

Luca Ciferri is Automotive News Europe's chief correspondent
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What can you do with a single euro coin? Not a great deal -- except now it appears you can buy a car plant with it instead of putting it towards a cup of coffee.

Mitsubishi is willing to sell its Nedcar factory in the Netherlands for a symbolic 1 euro, according to Dutch Economics Minister Maxime Verhagen. The Italian government is nearing a final agreement for the small Italian automaker, DR Motor, to buy Fiat's former plant in Sicily for just 1 euro.

With Europe facing car overcapacity of between two and five million units, according to analysts, it appears that automakers are willing to give away fully amortized plants for basically nothing.

This way carmakers can shed thousands of workers without being the "bad guy" who closes a plant and fires the employees.

A potential buyer gets a clearance sale price, but it comes with a daunting challenge: how to make something profitable that a larger automaker couldn't.

Both the Dutch and Italian governments do their best to protect jobs when unemployment is rising, and Belgium would surely have helped too if any serious buyer had materialized for the former Opel plant in Antwerp, which closed in 2010.

But the reality is that white knights who are capable of turning around failing factories exist in fiction but they have not yet been seen in the business world.

Who can forget events in 2000 when the Phoenix Consortium bought the UK's last domestic volume automaker, the Rover Group, from BMW for a symbolic 10 pounds – around 12 euros at today's exchange rate?

Despite the British bride arriving with a 500 million pound dowry (almost 700 million euros) from BMW, the newly created MG Rover collapsed within five years of the happy marriage and was sold off in pieces to two Chinese automakers.

And the ongoing story of Saab's re-incarnation, first under GM and then under the smaller Dutch-based Swedish Automobile is not over yet either. Although there are said to be four or five potential buyers for Saab, a happy end to this story looks more unlikely as each day passes.

On the face of it, balancing business reality with social responsibility seems a good idea, but in the end that euro might be better spent on a cup of coffee.

You can reach Luca Ciferri at lciferri@crain.com.

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