Fiat boss predicts zero growth, at best, for Europe's mainstream car manufacturers to 2014
10 January 2012

Fiat boss Sergio Marchionne today predicted zero growth, at best, for Europe's mainstream car manufacturers between now and 2014, while the Eurozone financial crisis runs its course, and stressed again the extreme importance of scale for groups like his own as a bulwark against market fluctuations.

"Being small, diverse and beautiful means absolutely nothing," he told a packed house in one of his typically knockabout press conferences. "You end up being small, diverse and non-existent."

He acknowledged the vital role Chrysler was playing at present in Fiat Group profitability, predicting that the company would soon announce production of two million cars and an operating profit of $2billion for 2011, while expecting to sell 2.4 million cars and earn $3 billion in 2012. "I can't imagine what would have happened to Fiat without Chrysler," he said. "At best, it would have been severely hampered."

He confirmed suggestions that the Alfa Giulietta-based Dodge Dart, launched this week in Detroit, would soon be made in China and pointed out that only projects of this type were likely to make money. "Operating leverage is the key", he said. "You set up a project and then you run the hell out fit, making as many cars as possible out of one basic product."

Despite what he called the extreme unpredictability of financial markets, Marchionne insisted that much of the industry had configured itself for growth in the medium term, once the Euro crisis has resolved itself. "Everybody feels good out the future," he said. "The serious players have embraced change and are ready to reap the benefit."

Under intense questioning, Marchionne rather reluctantly revealed his admiration for "the big guy", aka Volkswagen Group, which he believed had succeeded impressively at sharing as much as possible among its models while "preserving at the edges the independence of each brand". He also admitted his admiration for Ford's Alan Mulally, who had devised a plan and stuck to it, and also for the expansion of Hyundai, whose progress he watched "with both interest and anxiety".

He believed Europe’s industry still had too much car production capacity, though Fiat's affairs were not part of the problem. "Europeans have always wanted the comfort of not changing," he said. "But if you want to succeed, you've got to move it on."

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8

10 January 2012

[quote Autocar]"I can't imagine what would have happened to Fiat without Chrysler," he said. "At best, it would have been severely hampered." [/quote]

Always curious about comments like this considering the amount of money the Fiat group must have borrowed and are now in debt for (or may be taken from their reserves) to finance the purchase of Chrysler.

Still that's big business for you.

I am glad it is working for Fiat though and hopefully they can start turning round their European operation (Alfa in particular) soon.

 

 

It's all about the twisties........

10 January 2012

[quote TegTypeR]the amount of money the Fiat group must have borrowed and are now in debt for (or may be taken from their reserves) to finance the purchase of Chrysler.[/quote]

They got 20% for free just for getting into the bed and another 15% for free reaching for the three "performance events". So Fiat are out of pocket only for the remaining 23.5% that they own, I don't know at what price.

Now Chrysler is profitable (for the first time since 1997) and actually helping a lot to make up for not-so-flattering figures in Europe.

They have repaid the 7bn loans that the US and Canadian governments had given to Chrysler (at rates that were between 10 and 20%, as appropriate for a near bankrupt company) and replaced them with new loans, at the market rate for a healthy company, thus improving profitability even further.

They now have production plants almost everywhere (mainly Poland and Brazil, but also Serbia, US, Canada, Mexico, plus JVs in Turkey and elsewhere) which Marchionne effectively uses as a threat with unions and governments (give in to our requests or we'll go and manufacture elsewhere). After renegotiating all of the workers' contracts in Italy, fresh off the press is the quote that the Dart will be offered as a Fiat in Italy but imported from China rather than built in Italy.

The acquisition has hardly been a bad deal if you ask me.

10 January 2012

So,Marchionne,head of Fiat tells us that"Being small diverse

and beautiful means absolutily nothing."

"You end up being small diverse and non existent",it seems to me

he is talking about Alfa,why on earth does he not sell Alfa?.

Fiat over the years have made one hell of a mess of Alfa,no profits

for many years,they are as they always seem to be a one model

company,very very sad.

Please sell it to a company that has the money and knows how to

do the job,VW;

10 January 2012

[quote kdwilcox]

"You end up being small diverse and non existent",it seems to me

he is talking about Alfa,why on earth does he not sell Alfa?.

Fiat over the years have made one hell of a mess of Alfa,no profits

for many years,they are as they always seem to be a one model

company,very very sad.

Please sell it to a company that has the money and knows how to

do the job,VW;

[/quote]

Well, I work, since September, in an Italian company in Italy recently purchased by a German company and it's ok, I don't see downsides. But an Alfa owned by VW...I don't know, I don't see a place for Alfa products in VW lineup.

Said so, Fiat needs money to complete the takeover on Chrysler and selling Alfa could help so I don't know what could happen...

10 January 2012

[quote TegTypeR]Always curious about comments like this considering the amount of money the Fiat group must have borrowed and are now in debt for (or may be taken from their reserves) to finance the purchase of Chrysler.[/quote]

These kind of comments should be always avoided if you ask to me, I agree. Marchionne Chrysler-Fiat synergy worked but no one can really know how things could have gone...

What I know is that Fiat froze so many projects for so long a couple of years ago that even coming back to investing in developing new models again would have been late. At least in US market there was the chance to make some money bringing there old models and optimizing Chrysler.

10 January 2012

[quote giulivo]

After renegotiating all of the workers' contracts in Italy, fresh off the press is the quote that the Dart will be offered as a Fiat in Italy but imported from China rather than built in Italy.

The acquisition has hardly been a bad deal if you ask me.

[/quote]

Yes, I was listening to Marchionne speaking at the radio while driving back to home and he is continuing to attacks the labor unions even if he successfully renegotiated the contracts and make Fiat leaving Confindustria. He said that labor unions know only to say "no" at everything and it's their fault if no foreign big company has thought to place a single factory in Italy in recent years.

10 January 2012

[quote matsoc]it's their fault if no foreign big company has thought to place a single factory in Italy in recent years[/quote]It seems to me that that's a good thing - no competition backed by an outside administration able to subsidise their "home" company and so undermine local car prices; no foreign companies getting government grants, that is, local taxpayer money, to allocate a factory and then up stakes and leave when they experience a downturn worldwide and can leave because they have no loyalty to the host nation, hence indigenous companies have the field to themselves. Italian workers get Italian jobs and their product is not diluted by non-cultural influences. Which begs the question, why can't Fiat sustain sales in Europe (if that is true) to keep everybody in work?

10 January 2012

I think Marchinonne needs to learn that mediocre cars, that have no USP, aren't built well and don't even look that great (except maybe the 500, Panda and Giulietta - though none are class leaders) can't stay on the market for 8 years at a time. Of course you're not going to sell cars. He thinks people aren't buying the models so why renew - when he just needs to bring a class leading competitor to market, shorten the product cycle, and get some decent designers.

Look at the product shelf life of Hyundai models, or how the VW Golf gets has been refreshed and also with diverse ranges (MPV, estate, different styled 3 and 5 dr)

He may have saved FIAT to start with but now he is running it into the ground

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