JANUARY 22, 2005
The problems of crying wolf
Luca di Montezemolo said last September that Ferrari was 100% behind the GPWC. Last week this proved not to be the case when Ferrari announced that it had agreed a deal with Formula One Management instead of sticking with the GPWC. A Ferrari spokesman even went as far as to tell The Guardian that the GPWC had "served its function by securing a better deal for the team".
This week Montezemolo (wearing another of his many hats) said he was "absolutely certain" that Fiat had a right to sell its car division to General Motors under the terms of an agreement made in March 2000 which created a strategic industrial alliance with the US automobile manufacturer. This was aimed at bringing the companies closer together. Unfortunately since that deal Fiat has nose-dived, building up debts of as much as $10bn and GM, not surprisingly, does not wish to go ahead with the deal. Nor does it wich to pay the $4.5bn which Fiat is demanding to scrap the deal.
GM claims Fiat invalidated the original agreement in 2003 when it sold off 51% of Fidis Retail Italia, its profitable consumer credit business, to four creditor banks, thus changing what Fiat Auto owned and therefore its value.
The question they will be asking in Detroit is whether Montezemolo's "absolutely certain" statement is just another of his bargaining positions.
Who can tell?
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