Fiat, Chrysler Draw Ever Closer

April 22, 2010 by Matt Keegan

Sergio Marchionne, chief executive for Fiat and Chrysler, has outlined his five-year plan for both companies. Marchionne’s initiative is far-reaching, one that will separate the sprawling Fiat empire into two companies while drawing Chrysler ever closer to Fiat.

Two Fiats

The Financial Times reported on Wednesday that Fiat will be separated into two companies – Fiat for autos and Fiat Industrial, the latter comprised of its non-automotive divisions including Iveco trucks and Case New Holland, a producer of construction and farm equipment.

Marchionne’s ambitious five-year plan includes the blending of Fiat and Chrysler operations. The Fiat brand will be introduced to the North American market later this year when the popular Fiat 500 goes on sale (see photos following). In 2012, the Alfa Romeo brand will return with as many as five models available come 2014.

Lancia Revival

Marchionne also announced that Lancia would be revived, getting eight new models including six that it will share with Chrysler Group brands. Lancia will not be sold in North America while Fiat’s other two brands, Ferrari and Maserati, will continue to sell its cars in the United States and Canada.

Fiat controls 20 percent of Chrysler with that number expected to increase to 35 percent eventually. Fiat and Chrysler operations will remain separate although Marchionne hasn’t ruled out that the two automakers may eventually merge.

Big Changes

Marchionne announced that 51 new products will be introduced over the next five years, two-thirds of that total will be Fiat products and one-third Chrysler Group models. If all goes according to plan, the combined automotive operations will produce 6 million cars annually by 2014, exceeding the 5.5 million Marchionne said in December 2008 that automakers need to produce in order to be profitable.

Both Fiat and Chrysler have reported net losses for the first quarter of 2010, but each is expected to be profitable for the year. For Chrysler, that improvement is in stark contrast to more recent years when the automaker lost billions and eventually declared bankruptcy and becoming a ward of Fiat.