Purpose

I will try my best to provide detailed info on various cars and what is like to live with them, I have already produced a few for Jaguar-car-forums, I will do my best to be unbiased, but it will be hard for some cars. I will re-produce press releases and copy from other motoring news.

Saturday 3 May 2014

Marchionne faces tough task: fixing Fiat in Europe

Fiat-Chrysler CEO Sergio Marchionne faces a tough task in turning around the automaker's operations in Europe, analysts say, after losing 2.15 billion euros in the region in the past three years.
Marchionne's revival plan for Fiat’s struggling European business, which includes the Fiat, Alfa and Lancia brands, will be part of his wider unveiling of a new strategy for all of Fiat Chrysler on May 6. The CEO aims to exploit the synergies of the fully combined auto group.
His plan is expected to include as much as 9 billion euros in investment on long-delayed model for Fiat and Alfa that are crucial to stemming European losses by 2016.  

For the turn around to succeed, Marchionne needs to stop Alfa's chronic losses and improve capacity utilization at Fiat's underused Italian factories, analysts say.
"His main challenge to cut losses in Europe is to improve plant capacity utilization, and establishing credibility in terms of timing and viability of the Alfa Romeo pipeline," said Stuart Pearson at Exane BNP Paribas.
Fiat plans to make its stalled Italian plants profitable by: building more Maserati and Alfa Romeo models for export and adding output of Jeeps in the country.
Company executives also have hinted that the automaker will trim Fiat brand’s model range to focus on the strong-selling 500 and Panda minicars.
Unlike rivals Ford, PSA/Peugeot-Citroen and Opel, Fiat wants to avoid closing factories in Europe.
Fiat’s giant Mirafiori factory in its hometown of Turin once churned out almost 600,000 cars each year. Now it’s Europe’s least-used plant, according to figures from research group Inovev. Like other mass-market European carmakers, Fiat offsets its shrinking car sales in recession-plagued Europe with revenue from the healthy U.S. and Asian markets.
'Managed decline'
But unlike other volume carmakers, Marchionne has decided to cut back on investing in its core Fiat brand in order to conserve cash, starving dealers of product and shrinking European market share to 6.2 percent in 2013 from 9.3 percent in 2009.
The so-called “managed decline” of the Fiat brand’s European footprint is the right thing to do, analysts say. Fiat Group is also paring back its storied Lancia brand, reducing it to an Italy-only offering with just one model: the Ypsilon.
“On paper, that’s the right strategy,” said an analyst who asked not to be named because his bank works for Fiat. “The question for us is execution.”
Marchionne’s record is mixed on that front. Fiat Chrysler stumbled badly when it re-badged Lancia models as Chryslers in Europe.
The re-badged Chrysler 300 sold only 2,229 cars as the Lancia Thema in Europe last year, compared to an annual target of 10,000 to 12,000 units. The Chrysler Town & Country in its Lancia Voyager incarnation managed just 3,436 sales in Europe last year, down from 5,025 in 2012 and well below a target of 15,000. And then there’s the Lancia Flavia: this re-badged Chrysler 200 managed just 462 sales in 2013, down from 534 in 2012, according to figures from JATO Dynamics.
On the other hand, Marchionne’s relaunch of the group’s luxury Maserati brand is showing good results so far. Maserati is getting 3,500 orders a month, Harald Wester, who runs the brand, said in an interview with Bloomberg at the Geneva auto show in March. That would amount to sales of 42,000 cars this year, tripling the 15,400 sold in 2013.
Maserati could add a sleek new sports car to its lineup, the Alfieri coupe, within two years, shortly after the brand launches the Levante SUV in 2015, Automotive News Europe reported in March. The Alfieri would be a rival to the Porsche 911 Turbo and the Jaguar F-Type. Maserati’s recent success is expected to be a blueprint for what Fiat plans for Alfa.
'Feeling the heat'
Dealers, unsurprisingly, disagree with analysts that the Fiat brand should shrink. Milan dealer Gruppo Fassina has been able to make up for lost revenue from the Fiat brand model drought by selling other brands like Skoda and Hyundai, said owner Toni Fassina. But he says he can’t keep doing that forever.
“I really hope Marchionne announces some new Fiat models – we’re feeling the heat from their competitors on all sides now in terms of both pricing and technology,” he said. “I started my career with Fiat in the 1980s, and want to keep going with them.”
Fewer Fiat models simply means lower volumes and lower sales, said Piero Mocarelli of Mocauto, another big Milan dealership. The aging Punto subcompact – which seems to be being quietly euthanized – is still important for sales, he said. 

“They are missing a car between the B- and C-segments,” he said. “But we’re looking forward to a few good years in front of us with Alfa and Jeep,” Mocarelli said.
Marchionne plans for Alfa also will be revealed on May 6. It will be the CEO’s fourth attempt to breathe life into the beloved brand. Fiat plans to develop a new line of rear-wheel-drive sedans and SUVs to bolster Alfa and take on premium carmakers such as BMW. The models will start to hit the market in 2016. High-end versions of the cars will be equipped with engines developed by Ferrari, Automotive News Europe has reported.
Analysts say they expect Marchionne to reveal some of the new Alfa models at the May 6 presentation in Auburn Hills, Michigan, to convince skeptics of the viability of the plan. They are also looking for details on how Marchionne will pay for all the changes.
“I am more interested in understanding how he will fund this thing, because I am still not quite clear what is going on in that sense,” said UBS’s Philippe Houchois, echoing a common sentiment.
After completing in January the acquisition of Chrysler Group, Fiat’s net industrial debt should have reached or surpassed 10 billion euros from 6.65 billion euros at the end of last year, analysts estimate.
“The question mark is how viable is the strategy of using Italy as a premium car manufacturing base in the longer term,” said Pearson of Exane BNP-Paribas. “After all, BMW builds cars in the U.S. and China. So their competitors are building locally.”
 

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