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UPDATE 1-INTERVIEW-GM unit sees opportunities if Fiat acquired

(Recasts with Fiat as lede, adds quotes, detail)

By Madeline Chambers, European Auto Correspondent

GOTHENBURG, Sweden, June 25 (Reuters) - An executive of the German unit of the world's biggest carmaker General Motors Corp on Tuesday outlined the potential benefits of a takeover of the auto unit of Italy's Fiat .

"There are a lot of opportunities" if Fiat decides to sell the unit, Carl-Peter Forster, head of GM German unit Adam Opel, told Reuters in an interview on the sidelines of an auto conference in Gothenburg.

He said an integration of Fiat Auto may help Opel to sharpen its brand image and that existing joint ventures in areas such as powertrain activities would be easier.

Many industry experts expect Fiat, struggling to cut its debt and return its auto unit to profit, to exercise its option to sell the remaining 80 percent of its car business to GM in 2004, a scenario that sources say is favoured by Fiat's creditor banks. GM already owns 20 percent of Fiat Auto.

Forster's comments are the furthest a GM executive has gone in welcoming the prospect of integration of the two companies, which many observers view as problematic given their operational difficulties. Both Fiat Auto and GM Europe are struggling to cut capacity and introduce new models amid tough market conditions in a bid to stem losses.

Forster stressed it would be up to Fiat to decide whether to sell the unit. Fiat so far, however, has said it aims to return its auto operations to profit on its own.

"We are playing both scenarios. Integrating the two companies would create a lot of work and also a lot of opportunities. We can work with both and we don't know which would work better," he said.

"PERFECT LANDSCAPE"

He said the integration of Fiat could help Opel to focus its brand, which has suffered in recent years from a perception of being boring and lacking in quality.

"I think we can create a perfect landscape of brands if the decision is made in two years time to come together," said Forster.

"I believe that, potentially with the Fiat brand, it would allow us to further point and focus our Opel brand," he added.

"We are competing in the market place right now, but in the future we will compete less because we will focus our brand on our competitors and not on ourselves if we come together."

He also argued that the Daewoo brand would help take pressure off Opel, which is currently stretched between a "value", or low-cost brand, and the more premium image it is trying to nurture in some segments.

GM recently bought some of the assets of South Korea's Daewoo and will integrate them into its other operations.

However, an integration of Fiat would make GM Europe a multi-brand organisation enveloping Saab, Opel, Vauxhall, Daewoo and Fiat, which is similar to Europe's biggest carmaker Volkswagen AG .

The German group has recently moved to boost the identity of its individual brands following criticism that some cheaper models were cannibalising sales of more expensive brands. "The aim should be to differentiate the brands further than Volkswagen," said Forster.

He also said there could be benefits to existing joint ventures with Fiat in purchasing and powertrain.

"The closer you are, the easier it gets. It would make life easier," he said.

PARTS TALKS

Forster also said he expected to agree a spin-off or joint venture of its parts business with engineer ThyssenKrupp and auto supplier Bentler by the end of the year.

As part of its restructuring plan, Opel is seeking a partner for its components operations, located at Kaiserslautern in southwestern Germany, Bochum in the industrial Ruhr district and Zaragossa in northeastern Spain.

He said ThyssenKrupp and Bentler had made a basic offer to Opel.

"What we have said is 'you are the ones we will negotiate with now to the last detail and finalise the deal'," he said, adding that an agreement was expected by the end of the year.

Forster also said the company was on track to reduce its operating loss significantly in 2002 from 674 million euros ($654.4 million) in 2001.

"This is a five- to 10-year marathon and we are just at the start," he said.