Fiat sets sales target of 7 million in '18

A worker unveils a new Fiat Chrysler Automobiles sign Tuesday at Chrysler World Headquarters in Auburn Hills, Mich.
A worker unveils a new Fiat Chrysler Automobiles sign Tuesday at Chrysler World Headquarters in Auburn Hills, Mich.

Fiat SpA laid out an ambitious plan Tuesday to increase annual deliveries to about 7 million vehicles in the next five years and to remake Alfa Romeo, Maserati and Jeep into brands with a global reach.

Chief Executive Officer Sergio Marchionne's new 2018 target -- part of a five-year strategy that he described for investors in Auburn Hills, Mich., after the completion of the purchase of the rest of Chrysler Group LLC in January -- is 61 percent above last year's 4.35 million vehicles.

"Today we bring all the various pieces of the mosaic together," said Marchionne, 61. "It's a courageous plan that in several respects represents a major break with the tradition of the past."

The move marks the next step in the CEO's decade-long effort to turn Turin, Italy-based Fiat into a carmaker big enough to challenge General Motors Co., Volkswagen AG and Toyota Motor Corp. Volkswagen, the world's second-biggest carmaker, is targeting sales of more than 10 million vehicles in 2014, while Toyota, the global sales leader, is forecasting deliveries of 10.32 million.

Marchionne's program includes expanding model offerings and production capacity at Alfa Romeo, Maserati and Jeep to make them into nameplates that can attract customers around the world. The Alfa Romeo effort is the most aggressive, with plans to spend $6.97 billion through 2018 to produce eight new vehicles and to increase deliveries more than fivefold.

"The problem is PowerPoint presentations are a lot easier than real life," said Harald Hendrikse, a London-based analyst with Nomura Holdings Inc. "These brands need a huge amount of work to get where they need to be. The world changes very slowly and you have brands at the bottom of the pile in many regions. It's not going to happen overnight."

Fiat's expansion will focus in particular on rebuilding Alfa Romeo because the marque has the potential to help drive profits for the group in the same way that Audi does for Volkswagen, by commanding higher prices than mass-market models bearing the Chrysler, Dodge or Fiat badges.

Alfa Romeo, which will develop new rear-wheel-drive and four-wheel-drive vehicles, aims to increase sales to 400,000 in 2018 from 74,000 last year. The automaker, which will continue to build all its models in Italy, will begin rolling out the new vehicles at the end of 2015 when a new midsized car goes to market. Alfa will ditch the Mito compact as part of the overhaul.

Maserati is expected to increase annual deliveries more than fourfold by 2018 to 75,000 and expand its model offerings to six, including adding the Alfieri sports car, shown in March in Geneva. The brand aims to more than triple revenue in the next five years to more than $8.4 billion. Maserati will spend more than $2.8 billion to push growth.

Jeep aims to more than double deliveries by 2018 to 1.9 million sport utility vehicles, with the number of dealers worldwide rising 28 percent to 6,023. The brand, which last month received approval to begin production in China, aims to eventually produce SUVs at 10 factories in six countries.

Marchionne is also planning to increase sales at the group's mass-market brands, with the Fiat nameplate's annual deliveries to rise 27 percent to 1.9 million in 2018 and the Chrysler brand more than doubling to 800,000.

The CEO wants to complete the merger of the Italian and U.S. carmakers by the end of the year, he said in March. The new entity, named Fiat Chrysler Automobiles NV, will have its main stock listing in New York while it will be registered in the Netherlands with a fiscal domicile in the U.K. for tax purposes.

Fiat started accumulating Chrysler stock in 2009 as part of a rescue of the U.S. carmaker after the global recession. Without the division, Fiat would have been unprofitable in 2012 and 2013 because of losses in Europe.

Information for this article was contributed by Chris Reiter of Bloomberg News.

Business on 05/07/2014

Upcoming Events