Marchionne Sees Fiat Narrowing 2013 Loss at European Unit
Fiat SpA (F), the Italian carmaker that controls Chrysler Group LLC, plans to narrow losses in Europe this year as sales may recover in the second half.
“We are dragging the bottom, but it’s the bottom” for industry sales in the region, Sergio Marchionne, chief executive officer of both Fiat and Chrysler, said today in an interview at the North American International Auto Show in Detroit. At the same time, “pricing is not great, and that continues to be the most troublesome part of the European market.” A revival in demand in the second six months of 2013 is “possible.”
Marchionne is relying on Auburn Hills, Michigan-based Chrysler to offset losses at Fiat’s mass-market brands in Europe as he works to make those operations profitable before merging the two manufacturers. The Turin-based carmaker has forecast a 700 million-euro ($935 million) loss in the region in 2012, and the CEO has said Fiat will break even there in 2015 at earliest.
“The small-cars segment is going to be challenging, so life is going to remain tough for Fiat in 2013,” said Mike Tyndall, a London-based analyst at Barclays Plc. It will be “a year of transition, and in theory a year of spending,” for Fiat in Europe.
Fiat rose as much as 6.6 percent and was trading up 3.6 percent at 4.28 euros at 3:54 a.m. in Milan, the highest since Oct. 18, based on closing prices.
The European car market is set to contract for a sixth consecutive year in 2013 after reaching the lowest in almost two decades last year, according to industry estimates. Marchionne told reporters at the Detroit show today that volume auto producers in Europe probably lost 5 billion euros in 2012.
Marchionne reiterated today that Fiat and Chrysler should combine into one company, in response to a question about buying the remaining 41.5 percent stake in the U.S. carmaker owned by the United Auto Workers Retiree Medical Benefits Trust.
Chrysler is complying with a demand by the trust last week to begin registration of its holdings in a step toward a possible initial public offering, Marchionne said. The fourth quarter is the earliest that an IPO could occur, he said. The trust is seeking to register 16.6 percent of Chrysler’s stock, the carmaker said on Jan. 9.
“I understand their objective,” Marchionne said today. “They need to see the position monetized. If they want to do it through an IPO, we’ll do an IPO.”