Fiat continues integration process with Chrysler

Fiat-Chrysler targets sales of 4.1-4.4M units in 2012; plans production facility in Russia

2012/05/01

Summary

 Fiat has proceeded with its integration process with Chrysler, and in January 2012, the automaker increased its interest in Chrysler to 58.5% after meeting the requirements set by the U.S. government in order to increase its ownership stake.

 Fiat-Chrysler Group's annual sales volume for 2011 was 4 million units (including 12 month of Chrysler) while Fiat, excluding Chrysler, sold 2.033 million units. 2011 consolidated net sales for Fiat-Chrysler was 59,560 million Euro, up 66.0% from last year, with Chrysler's performance combined from June 2011. The group's trading profit was 2,392 million Euro, which was a 2.2 times increase from the previous year. The report suggests that Chrysler's good performance had covered for Fiat's drop in profit due to decreased sales in Europe.

 Fiat expressed its performance outlook in terms of ranges because of the uncertain economic activities in near term in the eurozone. Fiat-Chrysler estimates between 4.1 to 4.4 million for its unit sales, over 77 billion Euro for its consolidated revenues, and between 3.8 to 4.5 billion for its consolidated trading profit (announced in February 2012).

 This report will outline Fiat-Chrysler Group's recent activities as well as the performance, new model plans, and emerging market businesses for Fiat Group Automobile (FGA) , Fiat's passenger car/light commercial vehicle division.

Related Reports:
Fiat-Chrysler Group in China (1) (Jan. 2011), (2) (Feb. 2012)
Detroit Auto Show 2012 (2) : US OEMs (Feb. 2012)
IAA - Frankfurt Motor Show 2011 (2): PSA, Renault, Fiat, and Hyundai/Kia (Nov. 2011)

Fiat-Chrysler Group: Unit sales by region (including 12 month of Chrysler)

(Millions of units)
Europe,
Middle East
& Africa
NAFTA Latin America Asia-Pacific Total
FY 2011 1.2 1.8 0.9 0.1 4.0
FY 2012 E 1.1-1.3 ~2.0 0.9-1.0 ~0.1 4.1-4.4

Source: Fiat Q4 & FY 2011 Results Review
Note: Excludes joint ventures.

Fiat-Chrysler Group highlights by region

Employees Plants R&D Centers Revenues
(million Euro)
2010 2011 2010 2011 2010 2011 2010 2011
Italy 63,214 62,583 44 46 30 38 9,782 9,258
Europe (excluding Italy) 24,616 21,746 29 31 13 13 11,857 12,363
NAFTA 5,579 60,336 11 58 5 16 1,270 21,423
Mercosur 39,498 44,668 18 19 5 5 10,027 11,298
Other regions 4,894 7,688 11 12 5 5 2,944 5,217
Total 137,801 197,021 113 166 58 77 35,880 59,559

Source: Fiat 2011 Annual Report
Note: Includes Chrysler from June 2011. The figures for all the other items in this table are from year-end data.



Fiat increases its interest in Chrysler to 58.5%

 Fiat has been working on its integration process with Chrysler since June 2009. In addition to buying additional stakes by achieving three requirements set by the U.S. government, the Italian automaker increased its stake by exercising its call option in connection with Chrysler repaying its debts to the U.S. and Canadian governments. After these purchases, Fiat holds a 58.5% equity interest in Chrysler in January 2012.

 Fiat also proceeded with its business merger process including integrating two companies' sales and service structures in Europe and in Latin America. Joint development of platforms, joint purchase of auto parts, and collaboration in production has brought Fiat cumulated synergy effect of over 1,400 million Euro (500 million Euro in 2010, and 900 million Euro in 2011).

Fiat increases its stake in Chrysler to 58.5%

Ownership Overview
June 2009 20.0%  Fiat acquired 20% of Chrysler stake in exchange for sharing technology for small and mid-sized cars and oversea channels with Chrysler.
January 2011 →25.0%  First performance event achieved: begins production of low fuel consumption engine FIRE, an inline-four, 1.4-liter Multiair engine for the Fiat 500 for the U.S. market, at Chrysler plant in Dundee, Michigan.
April 2011 →30.0%  Second performance event achieved: Chrysler's cumulated sales amount outside of the North America reaches 1.5 billion USD since the establishment of the new Chrysler Group in June 2009. Chrysler vehicles are introduced to the Brazilian and European markets.
May 2011 →46.0%  After Chrysler paid back all of its debts to the U.S. and Canadian government, Fiat exercised its call option to acquire 16% of Chrysler share for 1,268 million USD.
July 2011 →53.5%  Fiat buys 6% of the share owned by the U.S. government for 500 million USD and 1.5% of the share owned by the Canadian government for 125 million USD. Both governments sell all their Chrysler stock at this point.
 Fiat acquires the option held by the U.S. and Canadian government to buy UAW VEBA (Voluntary Employee Beneficiary Association) 's stake in Chrysler for 75 million USD (60 million USD to the U.S. government and 15 million USD to the Canadian government).
January 2012 →58.5%  Third performance event achieved: Compact sedan, Dodge Dart, which is built on Alfa Romeo's Giulietta platform, achieved a combined fuel economy of 40 mpg. The vehicle will go into production at Chrysler plant in Belvidere, Illinois.

Source: Fiat Q4 & FY 2011 Results Review, Fiat Press Release 2011.1.21/2011.4.21, Chrysler Press Release 2012.1.5
Note: UAW VEBA owns the remaining 41.5% of the Chrysler stock. Fiat plans to buy the remaining stock from VEBA to achieve total ownership of Chrysler. It has options to either acquire 16.6% of VEBA's share between July 2012 and June 2016 or acquire the entire 41.5% stock for 4,250 million USD with interest at 9% compounded annually (for the period VEBA owned the stock from January 2010).

 



Fiat-Chrysler Group's plans for new model launches by region

 Fiat-Chrysler Group will extend both companies' market share and their lineups with the launches of the Chrysler-based models to Europe and Fiat-based models to North America. Chrysler will release its small sedan Dodge Dart which is based on Fiat's compact platform in 2012.

 Fiat commenced its production of the Fiat 500/500 Cabrio at Chrysler plant in Mexico in 2011. This model is exported to the U.S. and Canada as well as to Latin America and China.

Fiat-Chrysler Group's new model plans by region for 2011-2012 (new and fully remodeled models)

(Chrysler brand is now integrated with Lancia in Europe.
Some models are sold under Chrysler brand for those regions that does not sell Lancia vehicles.)
2011 2012
First half Second half First half Second half
Europe,
Middle East
& Africa
Lancia/Chrysler Ypsilon Fiat Doblo Work-Up Fiat Panda Fiat 500L
*Fiat Freemont *Lancia/Chrysler Thema Fiat Panda Van
*Lancia/Chrysler Voyager *Lancia/Chrysler
Flavia Convertible
NAFTA Fiat 500 Cabrio 500 Abarth Fiat 500 EV
Dodge Dart *Dodge Viper
Latin America Fiat New Uno 3-Door Fiat 500
(Imported from Mexico)
Four new models One new model
*Fiat Freemont
Fiat New Palio
Asia-Pacific *Jeep Grand Cherokee Fiat 500
(Imported from Mexico)
*Fiat Freemont
(China)
Fiat C-Sedan (China)
Alfa Romeo Giulietta
*Chrysler 300
*Chrysler Voyager
(China)
Chrysler Ypsilon(Japan)

Source: Fiat Q4 & FY 2011 Results Review
Note: Chrysler or Chrysler-based models are marked with asterisks (*) and shaded in gray.


 According to the release plans for European market, Fiat will launch new Panda, its best-selling model, the 500L which is the light MPV version of the Fiat 500, and the Flavia Convertible supplied from Chrysler on an OEM basis under the Lancia/Chrysler brand in 2012.

 Launch of the new models under the Alfa Romeo brand will be postponed to 2013 or later due to the sluggish economy in Europe. A sporty compact, the 4C, and a compact SUV, a sibling model of Jeep B-SUV, will be released in 2013.

Model plans in Europe for 2012 and beyond (new and fully remodeled models)

Brand/Model Launch Overview
Fiat New Panda February
2012
 The third generation model of the best-selling compact car in Europe. It is one size larger than the previous model with improved comfort and safety. The production site will be transferred from the plant in Tichy, Poland to the Pomigliano d'Arco plant in Italy. The new model will also be sold in 40 other countries/regions outside of Europe.
500L Q4 2012  The forth variant of the 500 model. The 500L is a light MPV built on the platform used by the Punto which is wider than the 500. It measures 60 mm (2.36 inches) longer than the 500 hatchback version. It will be available in five- and seven-seater versions. The five-seater version will also be introduced in the U.S. The model will be produced at the Fiat plant in Kragujevac, Serbia.
500X End of 2013  The fifth variant of the 500 model. As with the 500L, the crossover vehicle 500X is built on the Punto platform. Available in front-wheel drive and all-wheel drive versions. Scheduled to be produced at Turin plant in Italy.
Lancia/Chrysler Flavia Convertible Spring 2012  The Chrysler 200 convertible (midsize 2+2 model) will be supplied on an OEM basis and sold as the Flavia Convertible. The sedan version was also planned for release, but was cut back due to higher production cost for the diesel model. Only the convertible version with gasoline powered 2.4L engine will be released.
Alfa Romeo 4C Mid 2013  A two-seater, compact sports car with a mid-engine.
Compact SUV End of 2013  A sister model of Jeep B-SUV. This model will go into production at the Mirafiori plant in Italy prior to the production of B-SUV.
Giulia 2014  A midsized 159 replacement. Available in sedan and station wagon types. It will also be sold in North America.
New Spider 2014  A two-door convertible model.
Large-size sedan 2014 or later  A large-sized sedan based on the next generation Maserati Quattrioirte.
Jeep B-SUV
(Code name)
Q2 2014  A SUV smaller than the Jeep Compass/Patriot. This model will go into production at the Mirafiori plant in Italy. Target markets include Europe, the US and other countries.
Fiat Professional New Panda Van Q1 2012  A car derived van. It will also be marketed in North America.

Source: Fiat Q4 & FY2011 Results Review, Automotive News Europe 2011.9.14/2012.1.27

 



FGA's 2011 sales drops 2.4% to 2,033K units with its poor performance in Europe

 The 2011 sales volume for Fiat Group Automobile (FGA), Fiat's passenger car/light commercial vehicles division, dropped 2.4% to 2,033K units from last year. The sales in Europe showed 7.0% decline as a result of its poor performance in almost every country with the exception of Germany. However, the group marked its highest sales with 1.6% increase year-on-year to 773K units in Brazil. The Fiat has remained the number one selling brand for ten consecutive years.

 The outlook announced by Fiat on February 2012 estimates the passenger car market in Europe to further decline to 12.9 - 13.4 million units in 2012 (13.6 million units in 2011) and LCV market down 3-5%. The Brazilian market is expected to expand 5% to 3.6 million units in 2012.

FGA (Fiat's passenger car/light commercial vehicles division)'s worldwide unit sales by brand and region

(Thousand units)
2004 2005 2006 2007 2008 2009 2010 2011
Fiat 1,225 1,173 1,388 1,589 1,538 1,629 1,474 1,347
Lancia/Chrysler 117 114 117 113 103 112 98 107
Jeep 6 26
Alfa Romeo 153 125 152 144 103 102 112 132
Light Commercial Vehicle 271 285 323 388 409 307 390 420
Worldwide 1,766 1,697 1,980 2,234 2,153 2,151 2,082 2,033
Europe 1,193 1,100 1,289 1,357 1,238 1,305 1,166 1,084
(of which) Italy 704 688 808 855 718 722 626 559
(of which) Europe excluding Italy 489 412 481 502 520 583 540 525
Brazil 358 404 465 613 666 750 761 773
Rest of the world 215 193 226 264 249 97 155 176

Source: Fiat Q4 & FY2011 Results Review, Presentation for investors 2012.2.1
Note: Ferrari, which is not included in FGA's performance, sold its record high 7,195 units during 2011 (up 9.5% over 2010). Maserati's sales volume was up 8.5% year-on-year to 6,159 units. The worldwide sales volume for Chrysler Group LLC was 2.011 million units (up 26%) for 2011.

 



Fiat signs a new labor agreement at all its plants in Italy

 In December 2011, Fiat announced that it has agreed to a new labor agreement with the workers at all its plants in Italy. The agreement, which was already in effect with three locations including Mirafiori and Pomigliano plants, was extended to all its facilities. Fiat will invest in its facilities throughout Italy to increase its production capacity in exchange for flexible working conditions under this new agreement and thereby acquire global competitiveness.

 At Mirafiori plant, which have already sealed the deal with the Italian automaker, the latest platform developed in collaboration with Chrysler is deployed, and a compact SUV under the Jeep brand and a sister model of the Alfa Romeo brand is under way to their production.

Fiat signs a new labor agreement at all its plants in Italy (December 2011)

Applies to  Approximate 86,000 employees working at Fiat and Fiat Industrial's vehicle and parts manufacturing plants in 60 locations in Italy.
Details  Workers are to cooperate with Fiat in improving its plant productivity and the agreement prohibits them from scheduled absence for labor dispute. The agreement was signed with five major labor unions in Italy, The agreement allows 17 to 18 shifts per week to improve its operation rate and workers are allowed to work overtime for 120 hours per year without prior approval from the union.
Fiat's goals  Fiat aims to acquire global competitiveness with this new deal and to make the European business break-even by 2014.
Concerns  FIOM, one of the major unions of metal workers in Italy, have not agreed to the new agreement. 13% of Fiat employees belong to the FIOM. The union is still strongly confronting the management over the agreement, and this may cause concerns in the future.

Source: Fiat Press Release 2011.12.13, Nikkei Newspapers 2011.12.19

Fiat to manufacture the Jeep SUV at Mirafiori plant in Italy

 Fiat will be deploying one of its three major platforms, which Fiat and Chrysler will jointly develop, to its Mirafiori plant in Turin and will begin production of vehicles under different brands for several models (announced in October 2011). The facility development will start from 2012, and the compact SUV, the first model to go into production, will be sold under the Alfa Romeo brand (from the end of 2013) as well as the Jeep brand (code name: B-SUV) (from Q2 2014). The plant will continue to manufacture the Alfa Romeo Mito (including the latest model planned for release in 2013).
 The plan to extend Mirafiori plant's annual capacity to 280K units with an investment of 1 billion Euro has been postponed a year after Fiat reviewed its investment plans. The plan is expected to begin from the latter half of 2013.

Source: Fiat Press Release 2011.10.3, Automotive News Europe 2012.2.3

 



Fiat's activities in emerging markets

 After failing to establish an alliance with Sollers, a major local automaker, in February 2011, Fiat has been looking for a different partner in Russia (Sollers went into partnership with Ford). In February 2012, a Russian state bank Sberbank agreed with Fiat for a joint venture production. The two organizations will set up a new facility. At the same time, the local truck manufacturer ZIL will go into contract manufacturing, realizing annual production capacity of 120K units.

 Fiat agreed with Tofas, a joint venture partner in Turkey, to supply Chrysler with commercial van Fiat Doblo produced by Tofas. Chrysler will sell the Doblo under the Ram brand in the North American market.

Russia: Fiat to produce the Jeep brand vehicles and to establish annual 120K production capacity with Sberbank

 In February 2012, Fiat signed a Letter of Intent with Sberbank, a Russian state bank, for a project to manufacture and distribute passenger cars and commercial vehicles in Russia. Both parties aim to finalize the deal by the end of June. The Russian bank intends to finance the project and also take a minority equity interest of up to 20 percent in the Joint Venture. The product range is expected to be based on Jeep vehicles and could subsequently be expanded to include other models and engines which will be produced and assembled locally. Chrysler may also participate in the project as an investor, as well as licensing production of some of its models.
 The preferred option for now is to locate the main plant in the St. Petersburg area. Furthermore, Russia's leading truck maker ZIL (Zavod Imeni Likhachova) will go into contract manufacturing of passenger cars, SUVs, and light commercial vehicles in Moscow. Total investment in the project is 850 million Euro and production capacity of 120K vehicles will be established with the production ability of the new facility and the contract manufacturing combined.

Source: Fiat Press Release 2012.2.28

Turkey: Fiat Doblo manufactured at Tofas plant to be sold under Ram brand in North America

 Fiat agreed with Tofas, its Turkish joint-venture partner, to provide Chrysler with its Fiat Doblo van manufactured by the joint venture in Turkey (September 2011). Chrysler will sell the Doblo under the Ram brand in the U.S. and Canada in early 2013. Tofas will export 190,000 units to North America from its Bursa plant over the next seven years. TOFAS will invest over 160 million USD for the necessary U.S. and Canadian homologation and customer requirement modifications.

Source: Fiat Press Release 2011.9.9

 



2011 Fiat-Chrysler Group revenue increases 66% to 59,560 million Euro

 2011 Fiat performance includes Chrysler from June. Consolidated revenues for 2011 were up 66.0% to 59,560 million Euro. The group's trading profit was 2,392 million Euro, which is a 2.2 times increase from the previous year. The net profit for the car maker was 1,650 million Euro, almost a 7.4 times increase year-on-year. The trading margin showed increase from 3.1% to 4.0% (the margin declined to 2.8% for Fiat excluding Chrysler).

 Due to the decrease in European sales and increase in publicity and R&D expenses, FGA's trading profit declined 29.2% to 430 million Euro in 2011. By contrast, Chrysler has done well with its sales volume, product mix, and product pricings all making improvements. Chrysler's trading profit of 1,345 million Euro covered for FGA's drop in its profit.

 Fiat expressed its performance outlook for 2012 in terms of ranges because of the uncertain economic activities in near term in the eurozone. Revenues for the entire group (including Chrysler) were over 77 billion Euro, trading profit between 3.8 - 4.5 billion Euro and, net profit between 1.2 - 1.5 billion Euro. The five-year-plan ending in 2014 will be reviewed when the automaker announces its financial statement for Q3 2012.

Fiat-Chrysler Group's revenues and trading profit by business (includes Chrysler from June 2011)

(100万Euro)
Revenues Trading Profit
2010 2011 2010 2011
Automobiles 30,130 52,967 934 2,127
Fiat Group Automobiles 27,860 27,980 607 430
Chrysler 23,609 1,345
Maserati 586 588 24 40
Ferrari 1,919 2,251 303 312
Components/production system 10,865 11,965 249 348
Other businesses 1,159 1,083 (71) (83)
Eliminations (6,274) (6,456)
Fiat-Chrysler Group 35,880 59,559 1,112 2,392

Source: Fiat 2011 Full Year and Fourth Quarter Results
Note: Automobiles division's figure and the total of all brands do not match because Automobiles division includes eliminations.

 

Fiat-Chrysler Group summary of performance

(million Euro)
2009 2010 2011
(Excluding Chrysler) (Including
Chrysler from June)
Net revenues 32,684 35,880 37,382 59,559
Trading profit 736 1,112 1,047 2,392
Trading margin 2.3% 3.1% 2.8% 4.0%
Operating profit 378 992 2,136 3,336
Profit before taxes 103 706 1,470 2,185
Profit/loss for the year (345) 222 1,006 1,651
R&D expenditure 1,154 1,284 1,411 2,175
No. of Employees 128,771 137,801 141,334 197,021
Source: Fiat 2011 Full Year and Fourth Quarter Results, 2011 Annual Report
Note 1: Trading profit = net revenues - (marketing cost + general overhead + R&D cost + miscellaneous cost).
Operating profit = trading profit + (gain or loss from sales of assets + miscellaneous gain or loss - restructuring charge).
Note 2: R&D costs include capitalized R&D and R&D charged directly to the income statement.
Note 3: Chrysler performance included from June 2011.

 

 



(Reference) Fiat-Chrysler Group's passenger car sales by model in Europe

Fiat-Chrysler Group's passenger car sales by model in Europe

(units)
2009 2010 2011
Fiat 500 179,241 172,205 156,301
Albea 11,843 14,816 8,951
Bravo 69,837 43,844 31,673
Doblo 15,569 19,685 16,588
Ducato 11,608 12,988 19,013
Fiorino/Qubo 23,176 24,785 20,049
Idea 9,586 6,128 5,982
Linea 15,075 18,976 35,499
Panda 299,992 235,163 189,527
Punto/G.Punto/Punto Evo 327,447 267,248 220,343
Sedici 19,862 16,381 14,777
Freemont - - 13,651
Other 61,391 35,588 6,515
Fiat Total 1,034,627 867,807 738,869
Alfa Romeo 159 25,708 15,034 10,430
Giulietta 0 33,168 78,819
Mito 62,122 51,994 40,417
Other 22,997 10,458 1,616
Alfa Romeo Total 110,827 110,654 131,282
Lancia Delta 29,971 23,426 18,690
Musa 33,525 25,041 16,431
Ypsilon 55,513 49,393 61,455
Thema 685
Voyager 1,196
Other 2,837 1,811 175
Lancia Total 121,846 99,671 98,632
Ferrari Total 2,868 2,987 2,895
Maserati Total 2,171 1,964 1,653
Other Total 11,570 1,057 668
Fiat Total 1,283,909 10,840,140 973,999
Chrysler Total 51,598 37,391 31,315
Fiat-Chrysler Total 1,335,507 1,121,531 1,005,314

Source: Automotive News Europe 2012.3
Note: Markets include 29 countries in Europe. Excludes commercial vehicles.

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