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Old 10th December 2008, 11:31   #1
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Default FIAT readying for sell-off/merger of Auto business!

The talk around FIAT's struggling Auto business has been in the air for a few months now, as the firm's profitability started tapering off after a small turnaround in recent times thanks to GM's largesse as well as the relative success of its small car the Grande Punto. However it was clear that the company would need more than one success to stem decades of rot - the auto industry is not about one-horse wonders as many of the smaller players are finding out.

Rumours about FIAT's sell-off or merger plans were more or less confirmed by their Chief Executive earlier this week. The question is, will they find a buyer or a partner who is willing to shell out the kind of money the Agnellis hope to get for an automaker that barely puts out 2 million cars a year?

Fiat chief executive warns: we can't survive alone | Business | The Guardian

Fiat Seeks Ally Before Pickings Get Slim - WSJ.com
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Old 10th December 2008, 11:48   #2
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What he says makes sense. I have always admired him as a no nonsense CEO who did his best for the company which was in dire straits. It is another matter that the company has still not recovered to the extent that it could be seen as profitable.

To me, Fiat in itself is doing good. Punto, Panda and 500 are doing well in Europe. What seems to be hurting them the most is the absolute non-performance of Alfa and Lancia in terms of sales. It is their strategy to be blamed primarily for that. 147 is old and literally begging for replacement and 149 seems to take ages to be rolled out. Mi.To does not seem to be doing as good as they hoped it would do. It looks like they have gone wrong in Mi.To somewhere.

The less said about Lancia, the better it is. Anyhow, it is not too much of a player outside Italy.

Ferrari, Maser and Iveco seem to be doing relatively better.

Again, Fiat's aim was to do the magic number of 6-7 million cars eventually. It obviously is a gradual process and they should spread their wings everywhere. Right now, they seem to be doing well only in Italy and Brazil. They are nowhere in India and China. Sergio's strategy for China has not been successful. With the recession, I really doubt whether those numbers are achievable.

Yes, merger is a better bet. Or, he can remove some of the brands like Lancia, which to me signify nothing. I for one believe that there will be a lot of realignment among the car makers in another year.

Anyway, these are the times when almost every manufacturer is struggling, and I find Fiat no exception. But, how much are they struggling, is the big question.
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Old 10th December 2008, 11:55   #3
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I wonder if FIAT will become FIT after they spin off their auto business !
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Old 12th December 2008, 13:05   #4
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Not exactly a great time to look for a partner/buyer either.
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Old 12th December 2008, 15:06   #5
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Quote:
"You need [to sell] at least 5.5m to 6m cars [a year] to have a chance of making money," Marchionne was quoted in Automotive News Europe.
Are all manufacturers producing less than that making losses?

Quote:
Car makers producing more than 5m cars a year include Toyota, Volkswagen, Ford and Renault-Nissan.
So are they all making profit?
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Old 12th December 2008, 16:21   #6
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After success of Grande Punto, I thought they are out of trouble. Then they started selling engine technology at the same time collobarated with GM to result into platform on which Corasa and Grande Punto are based. So where did it all go wrong. Also Ferrari is owned by Fiat and Maseratti also, so all of them are at loss ? I dont think so. I would say it is becasue of management error or what ?

This is rather surprising to me. Suzuki is comparitevely a smaller player than Fiat but still manages to atleast stay out of troubles. Mitsubishi is another player bigger than Suzuki, but still not that big, but in the past has managed to steer away from a complete collapse, all thanks to one model, the new Lancer. So its not the numbers game that matters. Prosche is the world's most profitable car maker and it is smaller than even our Tata cars if we go by volume. There is more than volumes. If you cant handle the money obtained from volumes, you are again going to hit pothole.

About the buyer, IMO, either Toyota, Suzuki should buy be partner. And if the Japs wont budge, then PSA group should expand their relationships.
I would love to see those Japanese cars with diesels. Imagine Fortuner with 2.2 ltr JTD or Imagine Camry with 2.2 JTD or Corolla with 1.9 JTD and even the 1.6 JTD SX4. Would work wonderfully and help generate more cash.
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Old 12th December 2008, 16:28   #7
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Quote:
Originally Posted by aaggoswami View Post
Suzuki is comparitevely a smaller player than Fiat but still manages to atleast stay out of troubles. Mitsubishi is another player bigger than Suzuki, but still not that big
FYI - top 10 list for 2008. I see Suzuki in there at #10. Where is Fiat? All this talk of Fiat being a major manufacturer is rubbish - it is a fringe manufacturer with presence in limited markets at best. Suzuki is a fringe player too, and they are in the Top 10 purely because of India but the fact is that they are making money.


World’s Largest Car Manufacturer Titles changes hands

Robust growth in car sales in emerging markets such as China, Russia, Brazil and India has helped automakers such as Toyota Motor and Volkswagen ride a downturn in North America and Western Europe.
Following is a list of the world’s top 10 auto groups ranked by vehicle sales in the first half of 2008, with the previous year’s ranking in brackets.

New Rank Old Rank Company Quantity sold (Million) Change (%)
1 2 Toyota Motor Corporation 4.818 +2.2
2 1 General Motors Corporation 4.540 -3
3 4 Volkswagen AG 3.266 +5.8
4 3 Ford Motor Corporation 3.217 -6
5 5 Hyundai Motor Corporation 2.187 +10.8
6 6 Honda Motor Corporation 2.022 +9.3
7 7 Nissan Motor Corporation 2.014 +9.7
8 8 PSA Peugeot Citroen 1.697 +.5
9 10 Renault SA 1.326 +4.3
10 11 Suzuki Motor Corporation 1.283 6.4

Last edited by Steeroid : 12th December 2008 at 16:32.
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Old 12th December 2008, 18:42   #8
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The talk of Fiat looking for sell-off/merger looks like posturing of Fiat CEO to gain more funds from Italian government. Most likely, they are looking for alliances than getting outright sold due to bad economic health.

According to the group's Dy. Chairman, even with 20% decline in revenue in 2009, Fiat is poised to be a profitable venture in 2009.

Source : Fiat seen profitable in 2009

Fiat group has had good profitable Q3-2008 and has made healthy *net* profit if not great.

Source: Fiat Q3-2008 profits 14% up and revenue 3%
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Old 14th December 2008, 15:44   #9
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The Milano Finanza newspaper in Italy reported that there are chances of a potential Peugeot-Fiat tie-up. The Italian PM and French president may have discussed this tie-up possiblity.

Neither Peugeot nor Fiat commented on this news.
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Old 14th December 2008, 18:09   #10
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RX135 is right. The Italians will never allow sale of FIAT. FIAT means so much more to them than Alitalia and look how Alitalia was kept on life support for so many years.

These are begging tactics, nothing more.
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Old 14th December 2008, 21:20   #11
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Peugeot and Citroen may end up just as Renault and Nissan.

Source : Report: Fiat & PSA/Peugeot-Citroen set to Merge - worldcarfans

Article :
Quote:
eports out of Italy have suggested that Fiat and PSA/Peugeot-Citroen are looking into the possibility of merging as a way to survive the current financial crisis. The news comes just days after Fiat's CEO, Sergio Marchionne, stated that the company would need to find another automotive partner to ensure the company's survival in light of the recent economic downturn.

The issue seems to have reached a high enough level that leaders in both France and Italy have held discussions on the matter. According to analysts a merger between the two companies would make sense, considering that both have extensive experience making small cars and the two have worked together since 1978 on joint projects such as the recent Peugeot Boxer, CitroŽn Jumper and Fiat Ducato vans. If the two companies were to merge their combined output would rival Volkswagen and Renault-Nissan, making the proposed company the fourth largest automaker in the world.

Any potential merger would take months to complete, but if such as tie-up does occur hopefully we can expect the return of the Citroen SM.

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