Marchionne: Fiat, Chrysler Could Become A Single Company
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by Bradford Wernle and Jason Stein - Automotive News Europe
Alfa will not be sold to VW, CEO says
SAN FRANCISCO -- Chrysler Group and Fiat Auto could become one company that could be based in the United States, Chrysler and Fiat CEO Sergio Marchionne told an industry conference here today.
That won't happen until after Chrysler refinances the U.S. government loans that have kept it from being profitable and until there is an initial public stock offering. Marchionne hopes both those things will happen this year.
“Who knows? In the next two or three years, we could be looking at one entity. It could be based here,” said Marchionne, speaking at the J.D. Power and Associates International Automotive Roundtable.
Marchionne said the companies are considering a number of “alternatives and scenarios. First we need to integrate them operationally and then look at governance.”
Since Chrysler emerged from bankruptcy on June 10, 2009, under the control of Fiat, it has worked feverishly to revamp its product portfolio. Sixteen new or revamped products are coming to market in 2011.
The next step for the alliance is sharing of technology and platforms. The first fruit of that labor will be a Dodge compact sedan based on Fiat architecture that is due in early 2012.
Reaching benchmarks
Chrysler reported a modified operating gain of $763 million -- but a net loss of $652 million -- in 2010. Fiat owns 25 percent of Chrysler and it could take that stake up to 35 percent by achieving a series of milestones.
Chrysler already hit the first of those when it began building the 1.4-liter four-cylinder FIRE engine at its Global Engine Alliance plant in Dundee, Mich.
Chrysler wants to restructure some of the debt on its $6.9 billion loans from the U.S. and Canadian government. Interest payments on those loans totaled about $1.3 billion in 2010.
Fiat could acquire another 16 percentage points of Chrysler ownership, up to a 51 percent stake, once it pays off those U.S. and Canadian government bailout loans.
In December 2010, Fiat completed a de-merger of its automotive and industrial operations into two separate companies.
The automotive operation is called Fiat S.p.A. and includes Fiat Group Autos, Maserati, Ferrari and the 25 percent stake in Chrysler. Fiat Industrial includes the Iveco truck unit and the Case New Holland agricultural and industrial equipment unit.
More on Alfa
Meanwhile, Marchionne also said Fiat will not consider selling its Alfa Romeo brand to Volkswagen AG.
VW Chairman Ferdinand Piech has indicated an interest in buying Alfa from Fiat Group. But Marchionne said: "As long as I am CEO of Chrysler and Fiat, Mr. Piech will never have Alfa Romeo. It's hands-off. I told him. I will call him and I will e-mail him."
Marchionne said Piech should concentrate on fixing Seat, VW's struggling Spain-based subsidiary.
"I'm not the one who bought Seat," he said. "He's the one who bought it. I don't know if he can [fix it], but he needs to try."
Marchionne was speaking at a JD Power automotive conference here.
At the Detroit auto show last month, Fiat executives said Alfa plans to relaunch the brand in the United States in late 2012. “We would not sell Alfa even if we were offered tons of money,” Fiat Chairman John Elkann told reporters at the show.