Thursday, March 15, 2012

Fiat In Distress

Chrysler's owner Fiat is in trouble. Fiat has a (declining) market share of 28.3 percent in its home market Italy, a market that had tanked 19 percent in February, and 18 percent in the first two months of the year. Fiat's sales in Italy, down 20 percent in February, slowed more than the floundering market. Fiat's southern exposure to the ailing parts of Europe is disproportional. Fiat's top executives will now have an emergency meeting with Italy's Prime Minister Mario Monti, Reuters reports. Possibly on the agenda: A closure of another Italian factory, and a cutback on investments in Italy.

Fiat already implemented drastic cutbacks. Fiat has cut new model releases in 2012 from 10 to six. According to Reuters, "new models from Alfa Romeo won't come until 2013, and its top selling Punto upgrade is on hold until 2014." This does not make Fiat popular with dealers, unions, and especially customers. Cutting back on new model launches is a short term fix. Inevitably resulting in lower sales, it is a fix that becomes costly in the long term.

Last month, Fiat & Chrysler CEO Sergio Marchionne had made noises about having to close Italian plants unless he can fill them with made-in-Italy Chryslers. Ominously, after the meeting with the Prime Minister, Fiat CEO Sergio Marchionne and boy-wonder Chairman John Elkann will meet Labor Minister Elsa Fornero and Industry Minister Corrado Passera. This could be a tougher meeting than that with Monti. Monti is a friend of the Agnelli family, he served on Fiat's board from 1988 to 1993, and was a guest at John Elkann's wedding in 2004.

 



from The Truth About Cars http://www.thetruthaboutcars.com




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