Marchionne skips Frankfurt on 'unforeseen' business commitments
FRANKFURT -- Fiat and Chrysler CEO Sergio Marchionne will not attend the Frankfurt auto show this week, Europe's biggest auto event, because of "unforeseen business commitments," Fiat said.
This marks the first time in recent years that Marchionne, 61, will not attend a major car show in the region. Fiat Chairman John Elkann will also not be in Frankfurt, the automaker said.
The Italian carmaker, which controls Chrysler Group LLC, isn't showing any new models from its mass-market brands at the show as Marchionne holds back on investments in the midst of the sixth straight annual decline in European auto demand.
Marchionne canceled two press events set for Tuesday and is unlikely to attend a meeting of the ACEA industry group, which he currently heads, on Wednesday, Sept. 11, Fiat said.
Marchionne also did not turn up to watch Fiat-owned Ferrari challenge its rival Formula One teams at the Monza Grand Prix race on Sunday, as scheduled.
Fiat will post 2013 trading profit of 3.88 billion euros, 120 million euros lower than the bottom end of the automaker's target, according to the average of 11 analyst estimates compiled by Bloomberg.
The Italian carmaker may report 87.6 billion euros in revenue this year, according to the average of 20 analyst estimates compiled by Bloomberg. That compares with a company's forecast of 88 billion euros to 92 billion euros.
"We expect them to miss the trading profit target and revenue targets due a shortfall in their performance in Brazil and at Chrysler," said Erich Hauser, an analyst at ISI Group in London.
Fiat has been hard hit by the downturn in new-car sales in Europe but signs of life in even some of the long-suffering southern European economies have raised hopes that demand might finally start to pick up next year.
Fiat's response to Europe's crisis has been to announce a range of new models for Alfa Romeo in a bid to grab a bigger slice of the more robust and higher-margin luxury car market, both in Europe and particularly Asia and the United States.
Sources familiar with the matter, however, say plans to start building the main models in the new Alfa Romeo range in Italy next year are facing delays.
Fiat is also aiming to take full control of its profitable U.S. unit Chrysler to gain guaranteed and quick access to the cash flow and technology it needs to compete in a global market.
And an agreement to buy out Chrysler's minority shareholder has become hostage to the outcome of a battle in a U.S. court, which could push the deal back to 2015.
One analyst said the two issues might be connected, with uncertainty over the timing of the Chrysler deal possibly having knock-on consequences for investment decisions.
"It seems a lot of decisions are hanging upon what they do with Chrysler," said UBS automotive analyst Philippe Houchois. "Once they have a deal and a price and have worked out how to finance it, they can decide what to do" in other areas.
A fund manager, who declined to be named, said: "The two drivers of this story are Alfa and the Chrysler merger, and we've had very little news flow in recent months." The manager added: "I am expecting the speed of investment to pick up from now on, because if you want to have an adequate pipeline for next year you need to get moving now."
'Waiting and waiting'
Fiat's stands at the Frankfurt auto show will be short of new products, while mass-market competitors will grab the limelight with previews of possible new models such as the new Ford S-Max minivan, Opel's gullwing Monza concept, Citroen's C4 Picasso minivan and Peugeot's 308 compact.
It's not that Fiat has been idle. The automaker has moved out two new models of its top-end Maserati sports car and the first of the new Alfa Romeo model lineup -- the limited-edition 4C sports car -- is expected to start production at the end of this year.
However, Marchionne has yet to sign off investment in the plant expected to build the likely biggest sellers of the new Alfa Romeo range, a large sedan and the mid-sized Giulia, putting a question mark over whether the models will hit the showrooms next year as planned.
Alfa Romeo has planned to launch a rear-wheel-drive large sedan based on the Maserati Ghibli as early as the end of 2014. But this summer Alfa shelved the idea to use Maserati's underpinnings for the car as too expensive. It is looking at basing this new flagship on the new rwd/awd platform also planned for the Giulia.
"Marchionne seems to be waiting and waiting for something to take place in the stars," said IHS Automotive senior analyst Ian Fletcher. "He's going to have to do something soon."
Fiat insiders play down reports that possible technical changes to underpinnings of the new Alfa Romeo range could cause delays, although the company hasn't denied them.
"It's a matter of building the best car," said one person with direct knowledge of the plans.
Another person familiar with the situation said the design for Alfa's E-segment car had been approved, and that it was on track to be unveiled towards the end of next year, as envisaged.
Chrysler merger key
While a successful Alfa Romeo relaunch is key to Fiat's recovery in Europe, its merger with 58.5-percent-owned Chrysler is probably even more important given the cash flow and technology it is expected to bring.
Fiat's stock market value has been "frothed up" by the perceived benefits of the deal, according to Citi analyst Philip Watkins.
However, the company's goal of sealing the buyout as soon as next year suffered a setback at the end of July when a U.S. judge ruled that a contract dispute with Chrysler's minority shareholder Veba should go to trial.
The judge's ruling may trim an estimated $500 million from the Chrysler buyout price tag, investment bank UBS has estimated, cutting its estimate of the value of minority share Veba's 41.5 percent stake to $4.0 billion from $4.5 billion.
The process could now drag on into 2015 and beyond. Veba has requested a trial take place no later than mid-2015, according to court filings, while Fiat is asking for a May 2014 start date.
Reuters, Bloomberg and Automotive News Europe contributed to this report
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