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.
Time to take Ferdinand Piëch up on his offer to buy Alfa Romeo. Fiat should make the sale contingent upon VW taking a Fiat plant even if that means giving AR away. That's a quick way to get rid of a high-cost Italian plant while keeping the unions at bay. This, plus VW's commitment to buy the historic Arese facility should satisfy the Italian government. Chrysler is not out of the woods yet either. It's hard to see how the upcoming Chryslers are going to beat the Camrys and Corollas of the world when the Fiats they're based on cannot even hold market share in Europe and are always at the bottom of every quality study.
Taking the Alfa Logo and putting it on every Seat would basically be a better place for Alfa Romeo to be as of now. While Alfa still has a lot of brand cachet (interestingly, especially to Americans who haven't been able to buy one in decades), their current offerings are just plain sorry. As of now, AR offers two models - a compact, and a sub-compact. A brand that has repeatedly stated they want to take on Audi and BMW, yet offers just two cars that are positioned at the lowest end of the competitors range. Even Mini - which should be a brand with a far smaller range of vehicles offers more different models than Alfa. And listening to Marhcionne, its not going to change soon - the oh so important midsize sedan and small SUV are being pushed further and further away, and by the time they do arrive, the Mito will be an old car itself. And somehow, the 4C sports car was missing from this years Geneva show... It's always amazing to see Alfisti (usually driving cars at least a generation old) talking about the brand dying when sold to VW, when the brand is already on its way to dying anyway... EDIT: Regarding the "brand identity" - that might suffer when sold to VW. On the other hand, thats usually something that people driving 10-20 year old cars talk about, people that will hardly every buy a new one anyway. Lamborghini Owners and buyers aren't complaining about Lambo becoming "teutonic", 25 year old people on message boards are. Is a real Alfisti really happy with being able to buy a Mito or Giulietta? Didn't Alfa lose its true identity back when it was sold to Fiat in the first place? a true Alfisti might ask himself if he'd rather want a "teutonic Alfa" or none at all. As of now, Alfa Romeo is selling as many cars, as Saab was back in ~2005. How did that turn out?
No surprise that Marchionne is visiting the Italian government for help. Next stop may be the White House. After all, what else are cronies for, and how else could a parasitic ward-of-the-state survive?
Strange that all the articles from Bertel are pro-VW and anti-Fiat :D All the brands in Europe market are loosing, in fact in this article, still from Bertel, http://www.thetruthaboutcars.com/2012/03/european-new-car-sales-worst-february-of-the-millennium/ you can see that the only groups with plus signs are Hiunday, Kia, Daimler and Jaguar. Even VW gets a -2,6%. Globally there are -100k car sales in Europe. For the financial problems, it seems that we can see the light at the end of the tunnel, in fact our 10 years Bond interest is 4,8% and the current situation in Italy is a lot better than in Greece, as long as we keep our politicians away from government What really Fiat needs is to sell cars all over the world, they are in South America but they have to improve sales in Asia, possibly in partnersihp with Suzuky.