LONDON - Just as General Motors was celebrating a major strategic triumph over its archrivals - acquiring a stake in Fiat Auto - Ford Motor Co. shattered its moment of glory.
Ford President Jac Nasser outmaneuvered his Detroit rival and bought Land Rover from BMW.
Luxury brand-poor GM needed the off-road jewel in the worst way, but Ford got there first. How? A Ford insider said Nasser 'just dared suggesting to (BMW Chairman Joachim) Milberg a deal and presented the concept to him.'
Well-placed sources say GM may challenge Ford's memorandum of understanding with BMW by making a counteroffer. GM has no choice but to try. It is in danger of being crushed by Ford and DaimlerChrysler in the global luxury car wars.
That's a huge problem for GM - especially in Europe, where profit margins on mainstream small cars are shrinking.
Now more than ever, GM needs BMW. And if the Quandt family decides to sell, GM can't afford to lose it. Except for tiny Porsche, BMW is the only independent luxury brand left in the world. Everything else has been snapped up.
But the Quandts may be less likely to sell. Rover is gone and the crisis is over. When the turmoil subsides, BMW will be back where it was in 1993 - sadder, wiser, but after selling Land Rover for $2.9 billion, not necessarily poorer.
Meanwhile, GM, with only Saab and Cadillac, is far behind Ford and DaimlerChrysler in the high-end sales race. DaimlerChrysler has Mercedes-Benz; Ford has Lincoln, Volvo, Jaguar, Land Rover and Aston Martin.
DCX sold 1,080,267 Mercedes-Benz passenger vehicles in 1998. With Land Rover's 178,000 sales worldwide last year, combined volume for Ford's Premier luxury brands would have been more than 850,000, compared with 322,247 for Saab and Cadillac.
In three to five years, the combined Premier brands are expected to sell at least 1.25 million vehicles.
Cadillac has never established itself outside North America, and has been under assault from European brands and Lexus at home. Saab is global but grew little in the decade that GM has controlled it.
GM needs to enrich its product mix in Europe.
'Profitability per unit in Europe is thinning every month - especially for GM and Ford,' said Peter Schmidt, an analyst at Automotive Industry Data in the United Kingdom. 'Bigger cars are more profitable, but GM's Omega is being squeezed and Ford's Scorpio has been dropped. Ford has shored up its portfolio in that sector, but GM has a huge problem. If anybody needs a brand like BMW in Europe, it is GM.'
All's not lost
Still, all is not lost for GM. The Fiat deal brings upmarket Alfa Romeo and Lancia into the GM family. Alfa's brand reputation has soared since the 156 was named Europe's car of the year in 1998. Meanwhile, Fiat is working to rebuild Lancia.
And through its 'network of alliances' strategy, GM may have an advantage when it comes to convincing the Quandts to sell. GM has proved with the Wallenbergs of Saab and now the Agnellis of Fiat that it can work with proud automotive families. In the case of Fiat Auto, of which GM bought 20 percent, control will stay with the family. Ultimately, that could make a difference to the Quandts.
Richard Johson is editor of Automotive News Europe