The agreement giving General Motors a 20 percent stake in Fiat Auto is just one more step in the automaker's strategy to strengthen 'the General Motors group.'
But not everyone agrees that GM can effectively manage a succession of networks and alliances that spans the globe.
Speaking at the Automotive News World Congress in January in Detroit, GM CEO Jack Smith said the automaker already has what most companies are seeking through merger and acquisition - namely, a truly global and diverse network of brands, manufacturing and distribution operations.
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'No automaker today has the resources to achieve leadership in all regions and all product segments on its own,' Smith told the audience. 'Our approach is to develop long-term relationships with other companies that offer a unique advantage to the General Motors' group of brands and businesses.'
Concluding the Detroit speech, Smith said: 'We think the more appropriate phrase to describe ourselves today is the General Motors group,' rather than the contrasting image of General Motors as 'a nation unto itself.'
With the addition of Fiat Auto to the alliances GM already has in place, the automaker has amassed stakes in a group of companies that accounts for nearly a quarter of the world's vehicle output, approximately 12.5 million vehicles. GM is the world's No. 1 vehicle producer; Fiat Auto is No. 7. Fiat produced 2.4 million units in 1999, down about 3.5 percent from a year earlier.
Other partners in the GM group include Isuzu Motor Ltd., in which GM has a 49 percent stake; Suzuki Motor Corp., of which it owns 10 percent; and Fuji Heavy Industries, which owns Subaru, 20 percent.
When the Fiat deal was announced in Turin, Smith said GM will continue to form alliances 'when the opportunities come up.' Before the GM-Fiat announcement, GM had expressed interest in Korean automaker Daewoo, which produces 1.1 million vehicles annually using GM platforms and engines.
But what kind of management skill will it take for GM to handle a group of stakes that spans the globe?
David Cole, director of the Office for the Study of Automotive Transportation at the University of Michigan, says GM doesn't have to manage them in the strictest sense. 'If you own them, you manage them all. But with this loose confederation of companies, what you manage is the product portfolio, the basic approach,' he said. In fact, analyst Jim Hall, vice president of industry analysis at AutoPacific Inc. of Southfield, Michigan, USA, says GM needs to avoid trying to run its numerous holdings from afar.