Fiat Bitten By Financial Watchdog

Bertel Schmitt
by Bertel Schmitt

Fiat says it sits on a 22.7 billion euro cash pile. CONSOB, the Italian equivalent of the SEC, told Fiat to explain “size and purpose” of its cash position, says Il Messagero in Rome. Fiat says it is not aware of an alleged probe, and that any suggestion that its cash pile was lower than reported in its statements was false, and will be dealt with.

“Any suggestion that Fiat may not have the liquidity stated in its financial statements is false and will be treated as such by Fiat,” Fiat told Reuters. However, the way we read it, Fiat is not accused of overstating its cash. Instead, it is blamed for not spending the money.

On September 24, Fiat CEO Sergio Marchionne said in a speech that he is “exasperated” by CONSOB’s “19 letters” between April 2010 and October 2011 that asked for more information about Fiat’s plans to invest in Italy. According to the Economic Times, “Fiat has 12.1 billion euros in cash and equivalents, and Chrysler, in which Fiat has a 58 percent stake, has 10.6 billion euros, it said on July 30. Fiat cannot access Chrysler’s cash because of agreements with Chrysler’s creditors.”

Bertel Schmitt
Bertel Schmitt

Bertel Schmitt comes back to journalism after taking a 35 year break in advertising and marketing. He ran and owned advertising agencies in Duesseldorf, Germany, and New York City. Volkswagen A.G. was Bertel's most important corporate account. Schmitt's advertising and marketing career touched many corners of the industry with a special focus on automotive products and services. Since 2004, he lives in Japan and China with his wife <a href="http://www.tomokoandbertel.com"> Tomoko </a>. Bertel Schmitt is a founding board member of the <a href="http://www.offshoresuperseries.com"> Offshore Super Series </a>, an American offshore powerboat racing organization. He is co-owner of the racing team Typhoon.

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  • Jimboy Jimboy on Oct 08, 2012

    I think there is just way too much suspicion going on here. Anybody looking at Europe these days is aware that it has not hit bottom yet. A prudent business person will hold on to cash rather than spend unnecessarily in an economic downturn. Marchionne is simply holding on to cash he may need later. Why invest in a market that has zero growth potential when that money could be better used elsewhere? It's going to take Europe at least a decade to rebound, so fighting for share is best left to the VW group, who are willing to buy share at a loss.

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    • Morea Morea on Oct 08, 2012

      @th009 "And those two are the only real products Alfa has today." Those ARE the only two products Alfa has. They don't even sell a V6 anymore even though from 1979 to 2005 they produced one of the most highly acclaimed automotive V6s ever made. Sergio sits on cash while his brands slowly die. Doesn't sound like what a business genius would do.

  • Gentle Ted Gentle Ted on Oct 08, 2012

    The main problem I see with FIAT and also with Chrysler is that the CEO is not really a Car Guy but a accountant by trade, thus this man can't have it both ways, he can't see the Forest thru the bush!!

  • Pastor Glenn Pastor Glenn on Oct 08, 2012

    If Marchionne were to buy up Mazda and get some fresh car lines to remake into both Chrysler and Fiat product, wouldn't that be cheaper than trying to re-invent the wheel? Just imagine a new 2015 Chrysler 200 based on the all-new highly acclaimed Mazda 6, for starters.

  • GTAm GTAm on Oct 09, 2012

    How can they blame them for not spending the money that belongs to the company?? CONSOB is a regulator not an advisor. Marchionne should just give them the finger.

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