Actions speak louder than words. Not at Fiat, where both were impressively displayed on Thursday. The Italian carmaker pulled off a gutsy operational performance in the first quarter. Against a backdrop where automobile revenues fell by a fifth and construction equipment by 60 per cent year on year, Fiat was only €48m short of making an operating profit thanks to an aggressive clampdown on costs.

Testing management is important right now because the group may soon be pulled in two new directions. Fiat has until the end of the month to close an “alliance” with struggling US carmaker Chrysler. Now it looks like Fiat is also sniffing around Europe’s Opel. Around these potential deals Fiat boss Sergio Marchionne was revealing. During Thursday’s conference call he spoke clearly about the auto industry on both sides of the Atlantic.

Mr Marchionne says there is too much capacity for the new level of post-credit crisis demand. Trouble is, there is no funding for the necessary consolidation. He strongly believes, therefore, that governments must help this process along. That explains why he will not commit a dime to funding Chrysler, a deal to which he remains committed. It also rules out selling any silver in order to finance acquisitions – either taxpayers help, or forget it. Opel, then, fits his view nicely: Fiat gets scale, capacity falls, General Motors is giving it away and the German government is offering loan guarantees to the tune of €3bn.

But there are two big risks. Management will be sorely stretched if it nabs Chrysler, Opel or both. Given recent successes, however, Fiat deserves the benefit of the doubt. The bigger danger is that Mr Marchionne believes the cyclical low has passed. He must be dreaming. Fiat is right to be opportunistic, but integrating one or even two new companies may turn out to be the least of its problems.

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