Fiat: Falling Flat, Even as it Explores a Second Alliance with PSA?
The sky is falling, the sky is falling. How do you say that in Italian? The folks at Chrysler might want to learn, and fast, considering the news out of Turin, this evening.
Chrysler is betting a lot, perhaps its entire future, on the global alliance it announced, earlier this week, with Fiat s.P.a., but after posting one of the most remarkable turnarounds in the industry, earlier this decade, things are suddenly looking a little problematic for the Italian automaker.
The Fiat Group is revealing that its net quarterly profit dropped from 597 million euros to 180 million euros during the last quarter of 2008. The Fiat car division’s revenues dropped 19 per cent over Q4. For the Fiat brand, as well as Alfa Romeo, Lancia, Ferrari and Maserati, revenues during October, November and December were 6.3 billion euros or 8.1 billion dollars, compared with 7.6 billion euros for the fourth quarter of 2007. The car division’s profits fell to 202 million euros, a drop of 44 per cent.
Though there was a bit less of a line waiting for those high-demand Ferrari sports cars, Fiat’s uber-marque continued to set records, but Alfa Romeo, the Fiat brand and Lancia saw sales slip considerably.
The forecast for 2009 is also disturbing, as Fiat expects to see a drop in worldwide sales of 20 percent, with the first quarter likely to be especially difficult. On the Milan stock exchange, after Fiat shares lost 9 per cent, following the announcement, leading to a temporary halt in trading.
Ironically, while Chrysler is struggling to get the U.S. government to continue propping it up, the Italian government seems ready to launch its own bailout program, even though all signs indicate Fiat would be able to make it through a moderately protracted global recession – and come to the aid of its new U.S. partner.
But the trans-Atlantic partnership may be just the beginning of a broader alliance strategy for Fiat, with the Italian media now reporting a second possible alliance, this one teaming Fiat and the French PSA Peugeot Citroën.