By on August 1, 2012

Fiat saved Chrysler. Now, Chrysler keeps Fiat alive. Fiat would be in deep trouble, would it not be for the huge profits generated at Chrysler.  Fiat’s future is so cloudy that it can’t give guidance for the near future.  Yesterday, Fiat reported a second quarter trading profit of 1 billion euros ($1.23 billion), “bolstered by soaring sales at its U.S. unit Chrysler,” says Reuters.  Today,  Fiat says it has no clue where it will stand by the end of the year.

Fiat says it can’t provide guidance “because of the international economic downturn and a slump in the European car market,” Reuters says.  Fiat promised  “information on products and plants” for when it will present third quarter results in October. Analysts get very grouchy when the company doesn’t tell them how the numbers will look a quarter or six months from now.

Without Chrysler, Fiat booked a 246 million euro  ($302 million) loss for the second quarter.  In Fiat’s home market Italy, overall car sales dropped  21.4 percent in July. Car registrations in Spain and France, where Fiat does considerable business, also caved.

 

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11 Comments on “Financial Outlook? Fiat Has No Clue...”


  • avatar
    el scotto

    Well the Euro is cratering and I don’t think too many Americans are running around singing “High Hopes”. Fiat’s accountants might be cautious and are giving financial forecasts of Bad, Very Bad, Route every 500 going to America through Marseille and stuff it with heroin bad. If Sergio makes optimistic projections and Fiat doesn’t hit them he looks bad in the press. If he predicts doom and gloom it might become a self-fulling prophecy. Damned if you do and damned if you don’t.

  • avatar
    Lampredi

    Does Marchionne have good tactical reasons for not giving any information, perhaps?

  • avatar
    jz78817

    “grouchy” analysts can go to hell. Europe is mired in shit right now and if I was Fiat I wouldn’t be making any predictions either.

  • avatar
    Dimwit

    Yep. Ask all these analysts what the outlook for the Euro is in 6 months and have them put money on it. Everyone will run screaming from the room. SM is doing the only wise thing right now.

    I wonder how many other execs are kicking themselves for not picking up Chryco for cheap when they had the chance.

  • avatar
    djn

    The more uncertainty, the more leverage Sergio has against the Italian unions.

  • avatar
    pgcooldad

    Here is something that caught my attention today.

    According to Allpar.com; “Chrysler has cash, cash equivalents, and available credit lines amount to about $13 billion. Fiat is not hurting for money at the moment. Its holdings in cash and credit are higher than Chrysler’s: nearly $15 billion.

    Fiat is legally barred from using Chrysler cash for its own operations. When the deal was struck for Fiat to assume control of Chrysler in 2009, the U.S. and Canadian governments added a condition that sequestered the American automaker’s cash. When Sergio Marchionne put together the financing deal that allowed Fiat to repay its government loans, a similar condition was included in the package. Until the loans are repaid or renegotiated, “firewalls are up,” as Marchionne said during yesterday’s conference call with analysts.
    Unlike what happened in when Juergen Schrempp created the “merger of equals” and absorbed Chrysler Corporation’s multi-billion-dollar nest egg, Fiat is legally barred from using Chrysler cash for its own operations.”

    http://www.allpar.com/news/index.php/2012/08/chrysler-cash-off-limits

  • avatar
    APaGttH

    And the good citizens of Italy, thank the American taxpayer for the Chrysler bailout and fire sale funded on the backs of the American taxpayer.

  • avatar
    Polar Bear

    Wonder why Fiat is so dependent on the Italian home market? Fiats are cheap and cheerful in Italy. But Fiat has spent decades at the bottom of reliability and quality surveys in Europe. This never seems to change, so Germans, Swedes and Brits are skeptical about Fiats.

    • 0 avatar
      Brantta

      It’s true. Fiat is not at the top of quality surveys.
      http://www.whatcar.com/car-news/what-car-reliability-survey-2012/introduction/263555

      Reliability Index – lower the better
      RI…….Car
      56…….Ford Ka (until ’09) (built by Ford, Ford chassis, engine, transmission)
      27…….Ford Ka (’08-) (built by Fiat, Fiat Panda Chasis, Fiat engine, transmission)
      69…….Fiat Panda (-’12)(built in the same factory with Ford Ka).

      So, from this you can clearly see that Fiat is significantly less reliable compared to the Ford, even though the both cars are built by Fiat in the Fiat factory, on Fiat chassis and drivetrain.


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