Fiat Chrysler lays out global push

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CEO Sergio Marchionne said the Italian-American carmaker aims to build sales globally. Photo: Filippo Alfero/AFP
09:18 CEST+02:00
Newly merged Fiat Chrysler Automobiles laid out aggressive plans Tuesday, including a revitalization of the Alfa Romeo sports-car line and the doubling of Jeep sales, mainly in China.

Chief executive Sergio Marchionne said the Italian-American carmaker aims to build sales not only in the United States but in other markets as it seeks to rival General Motors and Volkswagen.

"The history of the automobile industry is littered with alliances that have failed," Marchionne told investors, suppliers and reporters at Chrysler headquarters in Detroit, newly relabeled Fiat Chrysler.

"In the past five years, Fiat and Chrysler have learned to work together and trust each other," he said.

This has led to a sharing of technical knowledge and market savvy, which is turning the company into a true global automaker, he said.

"In a flat world, you cannot be secure in your own market unless you can compete on a global basis," Marchionne added.

Fiat completed its buyout of Chrysler in January, though the formal corporate union, combining their accounts, will not be completed until mid-2014. After that the company will list its shares on the New York Stock Exchange.

On Tuesday the Fiat Group released its earnings for the first quarter - with Chrysler still a minority-held subsidiary - that saw it falling to a loss of €319 million mainly on costs associated with its takeover of Chrysler.

Vehicle shipments were up 9.1 percent from the year-earlier quarter to 1.1 million units, and net revenues gained 12.3 percent to 22.1 billion euros.

With the European market in poor shape, and the US market booming, Chrysler's sales and profits have been crucial to its Italian parent.

Marchionne said the company is determined to build more presence in the world's strongest markets, including the United States and China, over the next five years.

A separate push is in store for Alfa Romeo, which has sagged behind rival luxury sports cars in Europe and has been virtually absent in the United States while Mercedes Benz, Audi and BMW have enjoyed booming sales.

READ MORE HERE: Fiat Chrysler plans Alfa Romeo relaunch

Harald Wester, the Fiat executive in charge of Alfa Romeo, said the brand has earned much glory on the race track but has never had much financial success.

"It neglected its roots," noted Wester, adding Alfa Romeo's commercial offerings lacked the technology and spirit that had made the brand so appealing when it went racing.

But a presentation showed a challenging effort to grow Alfa Romeo sales from 74,000 cars in 2013 to 400,000 in 2018, introducing eight new models over that time.

Two senior heads from Ferrari, another Fiat unit, will run Alfa Romeo's day-to-day operations, with Ferrari possibly helping develop powertrains for Alfa.

Keeping Ferrari limited

At the same time, the company will resist bowing to surging demand for its Ferrari supercars, limiting production to the current 7,000 a year level at least through 2018 to ensure the brand's image is protected.

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Demand in emerging markets like China is strong enough for a 10,000 unit annual output, but that is more than Ferrari wants to produce.

"We want to keep production capped to preserve the brand's uniqueness, while continuing to search for opportunities in emerging markets but maintain exclusivity in mature ones," said Marchionne.

Marchionne said Ferrari will launch a new model every year, with a four-year life cycle for each new model.

It will launch special limited series targeting the wealthiest customers and broaden its "personalization" of key models to boost Ferrari's profit margins.

"That's very good business for us," he said.

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