COMMENT: Rushing things will not save Fiat

COMMENT
Franz W. Rother is Editor-in-Chief of Automobilwoche

Sergio Marchionne has a lot of confidence. Marchionne made a name for himself as tough turnaround specialist at SGS in Switzerland. Now he is rushing Fiat through a brutal revival program.

Marchionne wants Fiat Auto to be the Fiat group's main earner by 2007, or even by 2006.

But the question is how much strength will Fiat Auto have left by then. Marchionne has axed three top managers during the past four weeks: Herbert Demel (Fiat Auto), Martin Leach (Maserati) and Jose Maria Alapont (Iveco). All worked towards a long-lasting strengthening of the group's brands.

Demel was convinced that "Fiat Auto can only be returned to profit again through the Fiat brand."

Demel learned from his experience at the Volkswagen group that rushing things through cannot achieve a turnaround. He planned to revive Fiat with a well-considered program of new models, improved production quality and by optimizing sales.

An automaker is not like a service industry company whose products can be completely changed in just a few months. New models cannot be created overnight. A new quality philosophy cannot be drummed into employees' brains by giving two or three talks. A turnaround cannot be achieved in 15 months or even two years. Something like this needs time and patience. Both are qualities that Marchionne does not have.

Demel's days in Turin were numbered when he refused to drastically cut investment in research and development to improve Fiat Auto's balance sheet.

Marchionne wants to show how an automaker can be led back to profit. He has no knowledge of the industry. He is more of a bean counter -- with an instinct for the market's needs and a nose for the Agnelli clan's desires and the Italian banks' interests.

The 1.55 billion euros that General Motors paid to free itself from Fiat have given Marchionne a bit of room to maneuver. But no more than that.

Fiat Auto suffers from overcapacity, horrendous debts, a negative image and a drop in demand, even in its home country. It depends too much on the European car market and -- last but not least -- it offers a product range that shows originality only in the small car segment.

The Alfa Brera lacks inspiration. The Lancia brand is dead and, according to rumors, Maserati is nothing more than a beautiful facade.

Karl-Heinz Kalbfell is supposed to integrate Alfa Romeo and Maserati into some sort of "Premier Automotive Group" with an Italian touch. The ex-BMW manager would be well advised to hold onto the home he has in Munich. If Marchionne continues to make investment cuts, Kalbfell has no chance to turn the two brands into something solid.

Finnally, Fiat needs new partners, fast. On its own the company has as much chance of surviving as MG Rover.

Maybe a major Chinese corporation will be adventurous enough to join forces with Fiat to gain entry into the European market. The rest of the world's automakers probably will find an alliance with the Italians too risky.

And Demel? The man whom Marchionne says was moving too slowly to turn Fiat around? He was offered new jobs in the auto industry just days after leaving Fiat.

We will see him again very soon. Hopefully in a company that appreciates that, while a diesel engine may move slowly, it has strong torque.

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