TURIN – General Motors walked away from its five years as Fiat Autos powertrain partner on May 13 with something it needed: joint ownership of a 1.3-liter common-rail diesel engine.
Without this engine, GM would have completely missed out on the recent surge in demand for diesel-powered cars in the minicar and small segments, said Philippe Houchois, head of auto research at JP Morgan in London.
But Houchois wonders if the price GM paid for the engine was excessive as it shared half of the r&d and tooling costs for the engine while it was Fiats partner.
GM says that a third of the E1.55 billion it paid Fiat to end their alliance will be used to cover the following:
1. Shared intellectual property rights to the 1.3- and the 1.9-liter diesels the former partners developed
2. Joint ownership of the Bielsko Biala, Poland, engine plant where 550,000 units of the 1.3-liter diesel are built a year.
GM will also supply Fiat with its range of four-cylinder gasoline engines used by the Fiat Croma and Alfa Romeo 159/Brera range.
The Fiat-GM divorce shakes up Europes powertrain landscape as 15 of the partners 16 engine and/or transmission factories in Europe revert back to their original owners.
Fiat and General Motors agreed on Sunday, February 13, to end all aspects of their 2000 alliance. That includes: canceling the put option that allowed Fiat group to force GM to buy Fiat Auto; unwinding the Fiat-GM joint venture in powertrains and purchasing; and GM returning its remaining 10 percent share of Fiat Auto to Fiat group.
GM is turning its former Fiat-GM Powertrain assets into a new company called GM Powertrain Europe. Former FGP CEO Greg Deveson is the new vice president of GM Powertrain Europe. Located in Turin, the division will be GMs diesel technology specialist. GM Powertrain Europe also plans to open a new global diesel development center in Turin by late June.
Fiat Autos former FGP assets are being transferred to a new company called Fiat Powertrain Technologies. FPT is formed from units of three Fiat subsidiaries plus the powertrain specialists in three r&d centers.
The divisions that make up the new unit generated E6 billion in revenue last year. About 20 percent of revenues came from outside the Fiat group. The aim is to increase the companys non-Fiat sales to 40 percent by the end of the decade.
Former Magneti Marelli CEO Domenico Bordone heads FPT.