Fiat SpA chief executive officer Sergio Marchionne says his company, Italy's largest manufacturer, is in a Darwinian battle.
"Species go through a relentless effort to fit with the environment," Marchionne, 52, said at an Oct. 13 conference in Florence, Italy. "The struggle for survival never stops."
Fiat, founded 106 years ago in Turin, is limping from credit line to credit line as costs outstrip sales. The flagship car unit is unprofitable, leading to 12 straight quarterly losses totaling 8 billion euros (US$10.6 billion). On Feb. 28, Fiat may post a 400 million-euro loss for the most recent quarter, according to a Bloomberg survey of eight analysts.
Since he became CEO in June, Marchionne has fired six managers, including the head of Fiat Auto SpA last week. At the same time, he extracted US$2 billion from Detroit-based General Motors Corp, ending a four-year alliance. Marchionne hasn't revived sales, or a stock that has lost three-quarters of its value in four years.
Fiat, Europe's largest automaker 16 years ago, now has just 7.6 percent of Western European car sales. Rivals, such as Toyota Motor Co, which is based in central Japan's Aichi prefecture, are gaining market share. In Italy, Fiat's market share has fallen to 28 percent, from 60 percent in 1986.
The company, whose brands also include Alfa Romeo sports cars and Lancia sedans, hasn't had a top-selling European model since the compact Fiat Punto in 1997. Instead, it has had a series of flops, including the Stilo and Bravo and the Multipla van.
Shares of the company, founded by Italy's Agnelli family in 1899, plunged as losses mounted. They closed at 5.76 euros yesterday. Worth 16 billion euros at its height in 1998, Fiat now has a market value of 5.4 billion euros.
Since 2003, Fiat has eliminated 12,000 jobs and sold 10 billion euros in shares and assets, including Toro Assicurazioni SpA, an insurance company. Job cuts and plant closures helped return Fiat's CNH Global NV agricultural unit, second worldwide behind Deere & Co, to profit last year. Marchionne has said that Fiat's Iveco SpA truck unit, second in Europe to DaimlerChrysler AG, is also profitable.
What Fiat needs to do now is to produce cars that consumers want to buy, says Paolo Wenk, who manages US$400 million in assets at Banco di Sardegna in Milan.
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