Automotive News Europe - March 2013 - 4

AUTOMOTIVE NEWS EUROPE

COVER STORY

Marchionne’s big gamble
CEO bets billions on Alfa, Maserati revival; skeptics see many risks, few rewards
LUCA CIFERRI

lciferri@crain.com

T

Marchionne’s big gamble on Alfa and
Maserati comes at a time when rivals
such as PSA/Peugeot-Citroen, General
Motors and Ford Motor are negotiating
to close European car plants to adjust
to shrinking demand and to end big
financial loses in the region.
Marchionne has said for years that European volume automakers must make
painful capacity reductions to become
profitable in Europe again. Now the
CEO has accepted that it is politically
impossible for Fiat to close factories in
Italy. To fully use the group’s underperforming Italian plants, Marchionne aims
to increase Maserati’s annual sales to
more than 50,000 by 2015 from about
6,000 last year, and he wants Alfa to
triple sales to more over than 300,000
by 2016.
Boosting exports from Italy to global
markets makes sense as the European
new-car market has shrunk every year
since peaking at 16 million units in
2007. New-car sales dipped 8 percent
to 12.5 million in Europe last year and
volume is forecast to slip below 12
million this year. Analysts don’t see a
return to the pre-crisis sales level until
the end of the decade at the soonest.
Marchionne is also wise to concentrate
on the Fiat Group’s higher-end brands,
especially considering the success
of BMW, Audi and Mercedes-Benz.
The three German premium automakers have avoided the European sales
declines that have plagued most volume
brands over the past few years. In

4

www.autonewseurope.com

Photo: Reuters

URIN -- Fiat CEO Sergio Marchionne
is betting billions of euros that Alfa
Romeo and Maserati will help drive
the automaker’s money-losing European operations back into the black by
2015-2016. He’s also counting on the
underperforming sporty brands to help
ignite a production boom that will turn
the company’s under-used European
plants – particularly those in Italy – into
export champions that will work around
the clock to meet untapped global demand for models such as the Levante,
Maserati’s first SUV.
Fiat CEO Sergio Marchionne is counting on the new Quattroporte (background) to help Maserati boost annual sales to more than 50,000 by 2015
from about 6,000 last year.
addition, all three have added shifts
or shortened vacation periods at their
European plants in recent years to
keep pace with strong demand for their
models in countries such as China and
the United States.
“We will focus on Alfa Romeo and
Maserati to access the higher end of
what we consider to be a permanently
polarized market now,” Marchionne said
last month.

Can’t do both?
Analysts are skeptical about Marchionne’s new plan because it will likely
conflict with his other mission, which is
to take full control of Chrysler Group.
Industry watchers say Fiat simply does
not have enough cash to buy the stake
it still needs to take over Chrysler and
also to invest billions to revive Alfa
Romeo and Maserati.
“While Fiat adapting its product to a
polarizing market makes sense, we
think the market could be disappointed
that capacity actions do not feature in
Fiat’s plans, especially given Ford, GM
and PSA have all made tough capacity
decisions recently,” Morgan Stanley
analysts wrote in a note to investors. In
early February, Marchionne reiterated
that Fiat won’t close any Italian vehicle

assembly factories. The Cassino, Melfi,
Mirafiori (Turin) and Pomigliano plants
have an installed capacity of 1 million
units, but last year their combined output declined by 18 percent to 394,620
units, according to the Italian automakers association ANFIA.
An automaker should use from 75 percent to 80 percent of installed capacity
to reach break-even, industry observers
say. Last year, Fiat’s capacity use rate
was about 40 percent in Italy and just
above 50 percent in the rest of Europe,
which includes plants in Poland, Serbia
and a joint venture in Turkey.
Managing capacity might get even harder for Fiat as it adds production in Italy.
In January the automaker reopened an
abandoned Bertone plant outside of Turin, where it plans to build up to 50,000
Maseratis a year. If Marchionne’s plan
to build upscale vehicles in Italy works,
high-margin Alfas, Maseratis and Jeeps
will offset the country’s high labor costs
and low labor flexibility.

2 million vehicles
The CEO envisions Fiat’s European
plants building about 2 million cars,
SUVs and light commercial vehicles
annually by 2016, up from 1.25 million
units last year. At that production vol-

MARCH 2013
http://www.autonewseurope.com
Automotive News Europe - March 2013

Table of Contents for the Digital Edition of Automotive News Europe - March 2013
