Frey shakes up Fiat

New CEO for Germany wants to cut bureaucracy, boost Lancia

Frankfurt. A little more than three months into his new job, Werner Frey is giving Fiat a new sales and marketing structure in Germany.

Frey is taking over operations for Fiat and Lancia in Germany. Manfred Kantner, who has been in charge of the brands, is getting new international responsibilities at Fiat's headquarters in Turin, Italy.

Kantner thus becomes the last high-ranking executive from the previous regime to leave. He had been one of the key lieutenants for Stephan Winkelmann, Frey's predecessor.

Frey took the reins at Alfa Romeo in late August after the brand's chief executive, Kirsten Roenau, left.

While Frey looks for new leadership at Alfa and Lancia, he intends to keep operational responsibility for Fiat. The whole organization is also supposed to be "cleared out," he said.

"We now are in much the same position as the Federal Republic of Germany," said Frey, who was formerly the vice president for Hyundai Motor Europe. "We need to become more flexible and less bureaucratic, to transform ourselves again into reliable partners for our dealers."

Among his intended changes, Frey wants to slash the number of financing programs for the three car brands. That figure now stands at 25.

But the cuts are not likely to include more jobs. The total number of jobs has already been cut from 310 to 250, and more reductions aren't planned.

"We are even going to hire workers," Frey said.

Frey wants to create a separate Lancia unit, introduce a key account-management group for large dealers, and hire up to five new employees for the fleet division.

Frey also wants to boost sales of commercial vehicles "from the recent figure of 2,000 vehicles to 12,000 by 2006."

All together, Frey is calculating that Fiat Auto's new registrations in Germany will reach 120,000 units in 2006 across all four brands, including vans.

"By 2008 at the latest, I want to hit 150,000," he said.

Last year, sales totaled 107,800 units. Frey expects sales in 2005 to drop to 100,000 because Fiat is pulling back from unprofitable sales channels such as rental-car business.

According to Frey, Fiat brand new registrations in 2005 will sink from 63,800 to 50,000. But for 2006, he foresees more than 60,000 new Fiat registrations, including 5,000 Croma and 30,000 Punto models. By 2008, he expects 90,000 new Fiat registrations in Germany.

At Alfa, new registrations are going to fall 200 units, to 14,000. Frey anticipates a recovery to more than 20,000 units in 2006. "And for 2008, I am setting my sights on up to 30,000," he said.

He is likewise hoping to pull Lancia out of its slump.

"By 2006, we want to double sales to 6,000 cars," Frey said. "I see Lancia at 12,000 in 2008."

But the promise of future sales isn't helping in the short term. Dealers are groaning over the loss of volume this year. Sales have dropped 30 percent through August, compared to the same period last year. More than half of dealers are in the red. The average yield on sales is near zero. But Frey is promising to boost that figure "to more than 1 percent by 2008."

As soon as possible, Frey wants to add 27 outlets to Fiat's current total of about 600 stores and about 27 stores for Lancia, which now has about 200. He has identified 22 open points for Alfa, which now has 250 dealerships, and nine for Fiat's van division, which now has 450.

Frey wants to stick with a total of 20 outlets for its branches in Berlin, Duesseldorf, Frankfurt, and Hamburg.

"They account for 12 percent of our total sales, and we want to steadily increase this share," he said.

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