Italian industrial giant Fiat is pushing on the accelerator as it seeks to establish itself a global player by formalizing a move out of its place of birth and by completing its merger with US-based Chrysler.
Friday was the last day of trading for Fiat shares on the Milan stock exchange ahead of Monday’s listing on the New York Stock Exchange (NYSE) of the merged Fiat Chrysler Automobiles (FCA), currently the world’s seventh-largest car group.
Fittingly, FCA will debut on Wall Street on Columbus Day, a public holiday marking the anniversary of the arrival of Italy-born Christopher Columbus in the Americas. Columbus Day is mostly treated as a celebration of Italian-American culture and achievement.
For the occasion, NYSE officials are set to welcome FCA Chief Executive Sergio Marchionne and FCA Chairman John Elkann, a scion of the Agnelli family that has controlled Fiat since it was founded in Turin, in 1899.
Marchionne, an abrasive manager with Canadian-Italian roots, is credited with having saved both Fiat and Chrysler from financial ruin. He arrived in Turin in 2004. Five years later he took control of the smallest of Detroit’s Big Three US carmakers.
“Under him Fiat definitely is in better shape compared to the situation years ago,” Juergen Pieper, an analyst with German bank Metzler, told dpa.
Completing the move out of Italy, the merged FCA is setting up its legal headquarters in the Netherlands and taking up tax residence in Britain, which will serve as the location for future corporate meetings.
“That might be due to tax reasons, but potentially it is also a symbolic step to show that Fiat is a global company,” Pieper commented.
According to a Thursday report by the La Repubblica newspaper, none of the company insiders who are being groomed to succeed Marchionne in 2018 are Italian – another sign that Fiat is embracing its new international identity.
In an unsentimental restructuring, the company is preparing to kill off its Lancia brand. It now hardly makes any cars in its historic Turin base, except for luxury Maserati saloons and a slow-selling, outdated Alfa Romeo model, the MiTo.
Production has dropped across Italy, from 1.4 million vehicles in 2000 to about 390,000 last year.
In May, the group presented an ambitious industrial plan focused on the development of the Jeep and Alfa Romeo brands, aiming to boost global sales to 7 million cars by 2018, up from 4.35 million last year.
Recently, Fiat has been propped up by strong performances in Latin America and the United States, where Chrysler-Jeep sales have flourished. But it has lost money and market share in Europe and has been nearly absent from key Asian markets like China.
There is scepticism about whether Marchionne – whose previous three comeback strategies for the still prestigious, but deeply troubled Alfa Romeo brand, have failed – will deliver on his four-year plan, at the end of which he has pledged to step down.
The first test will be the unveiling of a new Alfa saloon in June, to rival BMW’s 3-series and other established German rivals.
“I’m used to incredulity,” Marchionne told Businessweek magazine this week, claiming that setting less than ambitious targets would “establish mediocrity as a benchmark of the house.
“If you dream of peanuts, you get monkeys.”
Analysts doubt whether FCA, which is burdened by 10 billion euros (12.7 billion dollars) of debt, will be able to fund its planned expansion. A capital increase or a new merger with a rival would address the problem, but would likely further dilute the company’s Italian roots.
Speaking to Businessweek, Marchionne insisted that Fiat-Chrysler could manage alone. But he also did not rule out seeking a partner to create a group bigger than Toyota, currently the world’s number one carmaker.
“The industry needs it,” he said. “This is still a very fragmented industry for the level of capital you have to invest.”
GNA
