Fiat Group Loses Big in Europe, Hits a 20-Year Low Mark in Italy

Just two days ago, we reported that Fiat Group CEO, Sergio Marchionne, said that he would make the North American market Alfa Romeo’s top priority.

Now the Italian automaker’s boss admits that his company is facing huge troubles in Europe as in the first nine months of 2011, the company's sales decreased by 12% compared to the same period last year, with its share in the European market dropping from 8.2% to 7.3%.
Even in its home market of Italy, which used to be a stronghold, Fiat sales for the first nine months of the year have hit their lowest mark in the past 20 years.
Marchionne does not have any delusions that next year the situation will improve: “2012 will not be a great year for the European market”, he told reporters. “Since 2008, Italy has lost 700,000 cars, which for Fiat means a loss of 210,000 cars. There is no point in looking for new models”, he added.
With Europe being –at the moment- a lost cause for Fiat , Marchionne is looking overseas to compensate for his company’s losses.
Right now, the Fiat-Chrysler alliance's biggest profit contributors are the U.S. and Brazilian markets, and that’s where it will focus its efforts. Marchionne denied, however, reports that Fiat will leave Italy, despite losing money - and fast.
At this point, all of Fiat’s five Italian plants are loss making. The management wants more flexible labor deals and increased productivity, something the worker unions react to, with the FIOM metalworkers’ union organizing a strike on Friday.
“It’s a very bad idea”, commented Marchionne on the strike. “It’s certainly no way to encourage investments in Italy.”
Despite Fiat shares losing almost 30% of their value in the first nine months of 2011, Marchionne is not worried. “We have enough liquidity to deal with our requirements for quite a while," the group's boss. "The good news is part of our business is in good shape and generating cash… Europe is a source of concern.”
Now, you’ll never guess which part of "their business" he’s talking about…
Story References: Reuters

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Marchionne Gives North America Priority Over Europe for Alfa Romeo's Future Plans

Fiat-Chrysler CEO, Sergio Marchionne, announced that he will appoint a boss for the Alfa Romeobrand exclusively for the North American market. This is because the Italian carmaker’s return to the US after a 17-year absence will be his top priority, relegating Europe, in which Alfa’s sales are disappointing, to second place.

“We are going to target the US market first and work our way back to Europe”, Marchionne said in an interview with Autonews Europe. “We have run market tests on the desirability of the Alfa brand in the US and, not withstanding our long absence from the market it’s still one of the best brands in the world. I think we need to go back and grab it.”
This comes in contrast to the common industry practice of pleasing the more demanding European buyers first, with many carmakers going as far as building design centers and tuning their models’ characteristics according to European customer preferences.
Marchionne admits that Alfa Romeo remains the biggest problem he has to solve after seven years at the helm of the Fiat Group as the Italian brand’s vehicles such as the Brera, Spider, GT and 159 "failed to reflect the brand's sporty character"
Initial estimates have proved to be unrealistic: in 2006, Marchionne announced that he would double Alfa Romeo sales to 300,000 units by 2010. He missed the target by more than a…few miles: last year the company sold a mere 115,000 cars.
This forced Alfa Romeo’s CEO Harald Wester to reduce the annual target for 2011 to 155,000 units, and for 2014, when the carmaker will have implemented its brand-new plan and begins to roll out new models, to 400,000 units.
On the other hand, US Fiat dealers, who so far only have the 500 premium city car in their inventory, will be more than happy to hear that they will get Alfa Romeo, too. Chrysler Group’s head of network development, Peter Grady, has noted that the Group plans to increase its Fiat US dealership network to 150 by year’s end, from the 130 that were originally planned.

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