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Thursday, January 22, 2009
Fiat CEO: 'I have absolutely no intention of running Chrysler'

Fiat SpA Chief Executive Sergio Marchionne said he was convinced that Chrysler LLC could become successful again, but said he was not interested in managing the U.S. automaker directly.

"If you have the right leadership in place, these businesses can be turned around," Marchionne said in a teleconference.

His remarks were the first public comments by an executive involved in the proposed global alliance announced Tuesday between Fiat and Chrysler.

Marchionne said he believed the two automakers' operations were complementary, and both would benefit from a partnership.

Under the terms outlined, Fiat will offer Chrysler access to its small car engineering and platforms. In exchange, Fiat will obtain a 35 percent stake in Chrysler and has an option to increase that.

Marchionne said Fiat and Chrysler have a "near-perfect" geographical fit, which will benefit both partners.

"I think if we're successful in this, both Fiat and Chrysler will come as much stronger organizations," he said.

Marchionne, who became CEO of Fiat in 2004, has been credited with a remarkable turnaround at Fiat's car-making operations.

But the Italian company reported a 70 percent drop in fourth-quarter profit and forecast lower full-year earnings next year, signaling the tremendous difficulties that all automakers face in this severe downturn.

"In my view, it will be the toughest year ever," Marchionne said. "I think it's going to test every ounce of leadership skill that we have."

Marchionne reiterated his belief that this downturn would spur further consolidation in the industry -- and said Fiat wanted to participate in the process.

"The Chrysler arrangement is a first step in this direction," he said. "By far, it's not the last."

In Europe, speculation is mounting that Fiat and France's largest carmaker, PSA Peugeot Citroën, are in talks about a possible deal.

Marchionne declined to comment. A spokesman for the Peugeot group also did not comment.

But the French carmaker has recently signaled that it is open to forming alliances with other automakers, and it has close ties to Fiat. The two companies operate three joint production ventures.

Fiat is now conducting the due-diligence review process on the Chrysler deal and expects to complete it within weeks.

"We have carried out at least enough due diligence to get us to sign this letter of intent," Marchionne said.

He said other stakeholders in Chrysler, such as its bank creditors and the United Auto Workers union, would need to make concessions. "If the right level of concessions are made, we can find a way to make this work."

Marchionne spoke warmly of Chrysler's top managers and said he did not envisage running the American automaker. "In terms of my personal involvement, I have absolutely no intention of running Chrysler," he said.

Fiat is also working with Chrysler on a plan the U.S. automaker is required to submit to the U.S. government in turn for emergency loans. Chrysler has received $4 billion and has requested another $3 billion.

In exchange for loans, the government has asked Chrysler and General Motors Corp. to draft plans demonstrating how they plan to become viable.

Marchionne said he did not expect to become personally involved in the political process.

But Fiat's presence bolster's Chrysler's case, industry analysts say.

"It shows they're doing something about a forward plan, in terms of bringing new technology in, to meet future fuel-economy standards, and improving their products, also from a cost perspective," said Michael Robinet, vice president, global vehicle forecasts, at CSM Worldwide in Northville.

He said the alliance will help Chrysler bring out more fuel efficient vehicles in a two- to three-year timeframe.

The partnership also offers Chrysler access to other markets, Robinet said. "One of the knocks against them is that they're a regional company."

Fiat expects to benefit from Chrysler's expertise in certain segments, such as pickups, Marchionne said.

LINK:Fiat CEO: 'I have absolutely no intention of running Chrysler' | | The Detroit News
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