Fiat to Cut Forecasts for European Auto Market, CEO Says
Fiat SpA (F) will cut its outlook for the European auto market when the company updates its five-year plan that runs through 2014, Chief Executive Officer Sergio Marchionne said.
To assume that the Fiat’s outlook for Europe is going to be confirmed “is nonsense because the market won’t be there,” Marchionne told reporters yesterday in Columbus, Ohio. “We will be updating our forecasts for ’13 and ’14 as a consequence.”
Marchionne faces pressure from politicians in Italy, including Prime Minister Mario Monti, after the Turin, Italy- based automaker backed off its initiative Fabbrica Italia. Under that plan, Fiat was to spend 20 billion euros ($26 billion) to boost production in Italy in exchange for labor concessions.
Fiat said in a statement yesterday it wasn’t aware of any investigation by Italian regulator Consob related to the size and use of its cash. Italian daily Il Messaggero reported that the group was scrutinizing Fiat’s cash. The publication didn’t cite anyone in its report.
Marchionne declined to comment directly on the report, saying instead that it was reflective of the “level of angst” in Europe as auto sales in the region slump to a 17-year low.
“They want somebody to tell them that everything is going to be OK,” Marchionne, 60, told reporters. “The reality is, it’s going to be very difficult for everything to be OK for a while because I think the place needs a fix.”
Fiat said last month that it asked a U.S. court to confirm the price it has to pay to increase its controlling stake in Chrysler Group LLC after failing to reach an agreement with the United Auto Workers’ retiree health-care fund, known as VEBA, which owns 41.5 percent of the company. Fiat owns the rest.
Marchionne said his “hope” is that the Delaware Chancery Court rules on the matter by the end of the year. As part of Auburn Hills, Michigan-based Chrysler’s 2009 bankruptcy, Fiat was given an option to purchase a portion of the fund’s Chrysler stake every six months through June 2016. The agreement covered 40 percent of the UAW trust’s holdings.
Fiat wants to acquire about 3.3 percent of Chrysler from the retiree health-care fund, which would raise the company’s stake to 61.8 percent. Marchionne said in June that Fiat would pay less than 200 million euros for the added holding that’s in dispute in the Delaware court.
“When we signed the damn thing in 2009, it was clear,” Marchionne said. “Today, now that things have changed and we’re making some money, it’s incredible how differences of opinion arise.”
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