Tag Archive | "Fiat SpA"

Chrysler Recalls Fiat 500L on Knee Air Bag Issue


Chrysler Group LLC will recall about 29,500 Fiat 500L compact cars because knee air bags may not work properly if a driver is not wearing a seat belt, the company said on Wednesday, reported Reuters.

Testing by Chrysler and the National Highway Traffic Safety Administration showed that the driver’s knee air bag may not deploy in the proper position to protect fully the knees of an unbelted driver, a company spokesman said.

Chrysler, a unit of Fiat SpA, said it is not aware of any injuries related to the issue.

Most of the cars recalled are registered in the United States, and 4,000 in Canada.

The recall will affect Fiat 500L cars from the 2014 and 2015 model years.

Driver’s knee air bags are standard equipment in the 5000L.

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Fiat Chairman Says Marchionne to Remain Chief Executive


(Bloomberg) – Fiat SpA (F), the Italian carmaker that controls U.S. auto producer Chrysler Group LLC, will keep Sergio Marchionne as chief executive officer at least three more years to push company growth, Chairman John Elkann said. Marchionne will be responsible for carrying out a new business plan to be presented in May, Elkann said at a briefing at the North American International Auto Show in Detroit. Fiat and Chrysler together offer a good “bench” of eventual successors to the CEO, Elkann said.

The Italian company said on Jan. 1 that it secured full ownership of Auburn Hills, Michigan-based Chrysler in a $4.35 billion deal that will be the biggest in the auto industry since Volkswagen AG agreed to combine with Porsche in 2009. The accord with Chrysler’s other owner was a step in Marchionne’s efforts since taking the helm at Fiat in 2004 to merge the Turin-based company with a competitor to challenge industry leaders Toyota Motor Corp. (7203), General Motors Co. (GM) and VW.

Any successor as CEO “should be an internal one,” Marchionne said at the briefing. Elkann and Marchionne discussed the need for candidates in a conversation yesterday during which they pledged not to repeat the hasty terms of Marchionne’s 2004 appointment, the CEO said.

In May, Elkann named executives such as Richard Tobin, now chief executive officer of Fiat’s truck and tractor affiliate CNH Industrial NV; Lorenzo Sistino, head of CNH’s Iveco trucks unit; Alfredo Altavilla, Fiat’s European chief; Mike Manley, head of the Jeep brand; and Cledorvino Belini, head of Fiat in Brazil, as managers who have been groomed by Marchionne and could eventually run the company.

Fiat rose as much as 1.9 percent and was trading up 0.5 percent at 6.75 euros as of 3:21 p.m. in Milan. The stock has gained 54 percent in the past 12 months, valuing the carmaker at 8.44 billion euros ($11.5 billion).

The merger that Marchionne is seeking for Turin-based Fiat and Chrysler would enable the manufacturers to pool funds and tighten cooperation between the Italian company’s Alfa Romeo, Lancia and Maserati brands and the Chrysler, Dodge and Jeep nameplates. Fiat is open to additional partnerships with other carmakers such as PSA Peugeot Citroen (UG) and Suzuki Motor Corp. (7269), Marchionne said.

Jean-Baptiste Thomas, a spokesman for Paris-based Peugeot, declined to comment.

Marchionne has said he favors a New York listing for the combined entity. Fiat’s board will look at the subject at the end of January during a planned discussion on the company’s structure, and a new listing for the merged manufacturer is technically possible in the second half of this year, he said today, without specifying a location.

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Fiat Forecasts Profit Surge This Year on Strength of Chrysler Auto Demand


Fiat SpA, the Italian carmaker that controls Chrysler Group LLC, forecast 2012 profit will surge as much as 88 percent as the American carmaker’s earnings rise.

Earnings before interest, taxes and one-time items, which Fiat calls trading profit, will increase this year to between 3.8 billion euros ($5 billion) and 4.5 billion euros from 2.39 billion euros in 2011, the Turin, Italy-based carmaker said in a statement today. That compares with a 3.24 billion-euro estimate for next year from 15 analysts surveyed by Bloomberg News.

Sergio Marchionne, chief executive officer of both automakers, is counting on Chrysler to propel growth at Fiat, whose volume brands lost about 500 million euros in Europe last year as the region’s debt crisis causes consumers to hold back on purchases. Chrysler today reported U.S. deliveries surged 44 percent in January, the 22nd straight monthly year-on-year gain.

“Marchionne aims to aggressively capitalize on the spectacular recovery of the U.S. car market,” said Wolfram Mrowetz, chairman of investment firm Alisei SIM in Milan, who bought Fiat shares earlier this week.

“He’s betting on Chrysler sales as Europe remains a problem.”

Fiat rose 23 cents, or 5 percent, to 4.82 euros, the most since Jan. 16, in Milan trading today. The shares have gained 36 percent in 2012, valuing the carmaker at 6.06 billion euros.

The group’s fourth-quarter trading profit more than doubled to 765 million euros, beating an average estimate of 16 analysts for profit to reach 759 million euros. Revenue also more than doubled to 19.6 billion euros.

Chrysler, which has been consolidated into Fiat’s results since June, reported trading profit last quarter of 639 million euros, offsetting a 15 million-euro loss at Fiat and its other European volume car brands. Super-car marque Ferrari’s profit slipped 11 percent to 100 million euros. Net income in 2011 for the group more than doubled to 1.33 billion euros.

“All of it” came from the American carmaker, the CEO said today of last year’s net income. “I have absolutely no intention of supporting that nonsensical arrangement. That’s the definition of what I call an unhappy marriage.”

Marchionne, who aims to merge Fiat with Chrysler by 2015 and boost revenue to more than 100 billion euros in 2014, is looking for a third partner in Europe to increase efficiencies and cut development costs in an effort to end the losses. Marchione said today he hasn’t start yet any discussion with potential partners.

“Fiat’s loss in the automotive business in the fourth quarter comes as a shock to us,” said Erich Hauser, a Credit Suisse analyst in London who’s ranked No. 1 by Bloomberg among analysts who cover Fiat based.

“The guidance for 2012 operating profit is outlandish,” said Hauser, who confirmed his “sell” rating on the shares.

Fiat, which owns 58.5 percent of Chrysler, is willing to participate in an industry consolidation in Europe to compete with Volkswagen AG, the region’s biggest carmaker, Marchionne said last month. Fiat led a decline in auto sales in Europe last year with a 12 percent slump to 947,786 vehicles, according to the European Automobile Manufacturers’ Association in Brussels.

Marchionne said today that the purchase of the 41.5 percent Chrysler stake owned by the United Auto Workers union’s retiree health-care trust will be discussed in the second half.

Net debt at the end of 2011 rose to 5.5 billion euros from 500 million euros after Fiat incorporated Chrysler’s debt, the carmaker said today. Fiat expects debt to reach as much as 6 billion euros in 2012.

“Net debt is a key concern,” Stuart Pearson, a Morgan Stanley analyst in London, said in a note to investors Jan. 24 “The deep value within Fiat-Chrysler has always been in the terminal value of a merged and restructured organization. Unfortunately, 2012 is likely to see a step backwards from this goal if cash concerns slow essential investment.”

To create the necessary car-making efficiencies, automotive groups need to build from 8 million to 10 million vehicles a year, Marchionne, 59, said in January in Detroit. Currently only General Motors Co., Volkswagen and Toyota Motor Corp. are producing at or near that level. Fiat and Chrysler sold about half that figure last year.

Marchionne’s renewed interest in teaming up with another company comes as he considers lowering his 2014 sales target to 5.7 million cars from a previous forecast of 5.9 million. Fiat may globally lose 500,000 vehicle sales annually as a result of the European debt crisis, he said last month. Fiat and Chrysler deliveries will total about 4.9 million autos in 2014, based on the average estimate of 10 analysts surveyed by Bloomberg News.

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Peugeot Considers Forging Broader Alliances


PARIS—PSA Peugeot Citroen would be interested in forging a deeper alliance with another automotive group under certain conditions as it struggles to increase sales and eke out profits in Europe’s oversupplied car market, but there are no talks currently under way, France’s largest car maker said Thursday.

“We don’t exclude the possibility of accelerating what we’re doing through a broader alliance,” Frederic Saint-Geours, head of the group’s Peugeot and Citroen brands told journalists.

Earlier Thursday, Peugeot said slack demand for small cars and tough price competition in Europe contributed to a 1.5 percent fall in vehicle sales to 3.5 million units in 2011. Sales in Europe fell 6.8 percent but were up 11 percent in Latin America, 7.7 percent in China, and 35 percent in Russia, reported The Wall Street Journal.

“We’re more focused on developing outside Europe than defending our market share in Europe,” Mr. Saint-Geours said. The group’s European market share fell 0.9 percentage point to 13.3 percent in 2011. Mr. Saint-Geours said European demand will remain subdued for at least three to four years.

Peugeot’s performance contrasts with booming sales at European rivals with higher-margin luxury line-ups, less exposed to Europe’s weak southern economies, such as BMW AG, Daimler AG, and Volkswagen AG. Peugeot derived 61 percent of last year’s sales from Europe whereas China has become a market as important for the VW brand as Europe.

Mr. Saint-Geours said allying Peugeot to another automaker would have to fulfil three criteria: It must be coherent with Peugeot’s strategy; it must create real synergies; and can’t jeopardize the company’s independence and finances. The Peugeot family controls the group through a 30 percent stake.

“We are quite open to the idea provided these conditions are met, but we have to find the right partner,” he said.

Fiat SpA chief executive Sergio Marchionne said earlier this week that Fiat is open to the idea of bulking up with another volume car maker to create economies of scale. Mr. Marchionne met with Peugeot Citroen chief executive Philippe Varin on the sidelines of the show, stirring speculation about some kind of link-up between the two auto makers.

Peugeot has industrial partnerships with several other auto makers, including Fiat, BMW, Ford Motor Co., and Japan’s Mitsubishi Motors Co. with which it had talks about a more far-reaching tie-up.

Those talks ended in 2010 when the two sides couldn’t agree on financial terms. Mass-market car makers have become increasingly dependent on partnerships to help defray the industry’s high capital costs.

Peugeot has said its automotive division’s losses in the second half of 2011 would more than offset the €405 million ($514.6 million) profit in the first six months. In October, Peugeot mapped out plans to slash costs by an extra €800 million involving thousands of job cuts in Europe.

That still may not be enough to restore the group’s automotive division’s operating profitability this year. “We anticipate a loss in autos of €500 million (in 2012),” David Lesne, an analyst at UBS said in a note Thursday.

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Fiat Eying Partner Before Chrysler IPO


Fiat SpA could bring on board a third partner before any initial public offering of its Chrysler unit as the group moves to reach its target of selling 6 million vehicles in 2014, Fiat CEO Sergio Marchionne said on Tuesday.

“It’s possible to do an alliance before an IPO,” Marchionne said on the sidelines of the Detroit auto show.

Marchionne, who has made Fiat one of Europe’s top turnaround stories, told Reuters in December it was possible Chrysler would have an IPO in 2013.

The Fiat head, who is also CEO of Chrysler, had said on Monday he would be willing to be part of consolidation that would create another car company in Europe rivaling Volkswagen AG in size.

Some industry watchers have expressed doubts that Fiat will be able to meet its 2014 sales target at a time of economic slowdown and austerity.

But Marchionne said talk of a planned alliance with Peugeot SA as speculation, saying only that he had had dinner with the French group’s CEO Philippe Varin in Detroit on Monday night.

At that meeting, the topic of an alliance was not discussed, he said, adding that a merger with Opel was also off the table.

Italian newspaper Il Corriere della Sera on Tuesday cited unnamed well-placed sources as saying Peugeot was ready to negotiate an alliance with the Fiat group.

Peugeot, Europe’s second-biggest automaker after Volkswagen, declined to comment on the report.

An Italian analyst, who declined to be named, said an alliance with Peugeot would be positive and could help reduce costs, but would be a hard sell, as it would mean factory closures in both countries.

Fiat and Peugeot have ties dating back to the 1970s, with Peugeot plants in France having produced small vans and parts for the Italian group.

Shares in Fiat, which owns 58.5 percent of Chrysler, closed up 5.5 percent at 3.936 euros, outperforming the wider European car sector .SXAP, which was up 3.7 percent.

Peugeot shares jumped 5.6 percent to 12.92 euros.

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Marchionne Can’t Deliver 6 Million Predicted Sales With Europe Slump


Sergio Marchionne’s plans to propel car sales at Fiat SpA and Chrysler Group LLC to the 6 million mark he says is needed to guarantee survival may take longer to realize than the chief executive officer has predicted.

Sales will total about 4.9 million autos in 2014, 1 million less than Marchionne’s target for the year, based on the average estimate of 10 analysts surveyed by Bloomberg News, none of whom expects him to attain the goal as a slowing European economy crimps demand.

The CEO plans to combine Turin-based Fiat with the No. 3 U.S. carmaker before the end of 2014 to attain what he says is the “critical mass” required to secure long-term viability, with a forecast for 104 billion euros ($136 billion) in annual revenue then. The analysts forecast he’ll miss that goal by almost 16 billion euros, and that earnings will also fall short.

“Marchionne’s ambition for 2014 is unrealistic without an acquisition, which Fiat can’t afford as it completes the Chrysler deal,” said Hans-Peter Wodniok at Fairesearch GmbH in Kronberg, Germany, ranked No. 1 by Bloomberg among analysts who cover Fiat based on the stock’s one-year return.

The Italian company, which owns 53.5 percent of Chrysler, is seeking to be one of the five or six global carmakers that Marchionne predicts will remain in coming years, according to a presentation on Dec. 9 that ended on the Bruce Springsteen lyric: “Halfway to heaven and just a mile out of hell.”

Fiat fell as much as 2.9 percent and was trading 2.4 percent lower at 3.75 euros as of 2:49 p.m. in Milan, the poorest performance in the Bloomberg Europe Auto Index, valuing the company at 4.72 billion euros. The stock lost about half its value last year, the worst record after PSA Peugeot Citroen.

Fiat-Chrysler together ranked as the world’s seventh- largest automaker in 2010, the last year for which annual figures are available, with 3.6 million sales, putting them just ahead of Peugeot, Honda Motor Co. and SAIC Motor Corp. of China, according to data compiled by Bloomberg.

Four groups — Toyota Motor Corp., General Motors Co., Volkswagen AG and the Renault SA-Nissan Motor Co. alliance — had sales in excess of 6 million cars, while Hyundai Motor Co. and Ford Motor Co. were within 500,000 of that figure.

Fiat’s 6 million sales goal “seems more a slogan than a real target,” said Giuseppe Berta, economic history professor at Milan’s Bocconi University. “The only chance to get there in 2014 is by combining Fiat and Chrysler with a player in Asia, a region where the group is extremely weak.”

While Renault has succeeded in its alliance with Nissan, European carmakers generally have not done well when linking with Asian automakers.

A planned VW partnership with Suzuki Motor Corp. unraveled this year, with both sides accusing the other of not adhering to the deal. Daimler AG, then DaimlerChrysler AG, abandoned a five- year partnership with Mitsubishi Motors Corp. in 2005, after the Japanese carmaker’s losses rose following a series of recalls.

Fiat is pinning its 2014 goals on expansion in faster- growing markets and isn’t planning any acquisitions to meet its target, said a person familiar with the company’s strategy who declined to be identified because it hasn’t been openly discussed. The automaker, which will begin offering its first car built in China with joint venture partner Guangzhou Automobile Group Co. in the second half of this year, may also build a Jeep model at the plant too, the person said.

Fiat led a decline in European car sales in 2011, with deliveries through November falling 12 percent to 886,178, reducing its market share to 7 percent, European Automobile Manufacturers Association figures show. Analysts estimate that Fiat, which also owns Alfa Romeo and Ferrari, is losing 800 million euros a year in the region.

Marchionne said last month that the sovereign-debt crisis may prompt Fiat to revise its operating profit targets for 2012, though any new target should overlap with part of the existing range of 1.6 billion euros to 2 billion euros, excluding Chrysler. Fiat will present forecasts next month with its 2011 results. Marchionne expects Chrysler to post $3 billion in operating profit in 2012.

Fiat will also struggle to reach longer-term targets and may limit investment amid a possible recession in Europe, said Stuart Pearson, an analyst at Morgan Stanley in London.

The carmaker “needs a new plan to raise competitiveness,” Pearson said in a Nov. 30 note to clients, cutting his forecast for 2014 operating profit to 5.2 percent of sales, compared with a range of 7.2 percent to 8 percent given by Fiat in a four-year plan in 2010.

Jeff Schuster, senior vice president of global forecasting at LMC Automotive, said the group will sell 5.4 million vehicles in 2014, adding that a total of 5.9 million is seen only in the “outer years” of the consulting company’s predictions.

“Fiat went through a rebirth and now they’re treading water,” Schuster said. Chrysler, where 2011 sales rose 26 percent in the U.S, “actually is the part of the group that is doing better than the industry gave them credit for.”

The American carmaker, which also owns the Dodge and Jeep brands, said today its U.S. vehicle sales rose 37 percent last month, beating analyst estimates.

Marchionne is struggling to boost Fiat demand in North America, where its revival of the 500 subcompact achieved 21,380 sales through October, less than half the 50,000 target. The model, the first Fiat has sold in the region since 1983, has been available in the U.S. in March.

“I just don’t see the Fiat products being the be-all and the end-all,” said Alan Baum, principal of Baum & Associates, a consulting company in West Bloomfield, Michigan. “The 500 is cute, it’s fun, but that doesn’t sell you volume.”

Still, Marchionne reiterated the overall 2014 targets on Dec. 14 at a presentation of the new Panda subcompact near Naples, adding that the group will sell about 4.6 million vehicles in 2012, with Fiat sales “flat” at around 2.2 million cars and Chrysler’s deliveries increasing to 2.4 million from a forecast of 2 million for 2011.

The CEO hasn’t excluded the addition of another partner and said in September at the Frankfurt Motor Show that “you need to create big car groups,” adding that there is “no imminent” plan for another tie-up.

Marchionne said in April that Fiat will have to “fight for China,” where it is “showing up in the last quarter of the game,” while adding there’s still room to grow.

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