Sergio Marchionne, chief executive of Fiat SpA and its US subsidiary Chrysler Group, will be shifting the focus from Europe to United States in an effort to soften the impact of the region’s financial worries. Marchionne has vowed to close a second Italian factory for Fiat in order to reduce the carmaker’s excessive capacity in Europe, unless it finds a way to export vehicles to the booming US market.
Marchionne told analysts that the company needs to coordinate their efforts or else “somebody is going to pay a huge price." He noted that the European car market is heading for a fifth straight year of falloff as the Italian market dives to its lowest level since 1979. He said these are "irrefutable evidence of market decay."
Marchionne sees the flow of vehicles from Europe to North America as the only way for Fiat to survive the European crisis. In fact, he is cutting Fiat’s spending in Europe by EUR500 million this year while increasing the capital spending at Chrysler this year to $4 billion from $3.1 billion in 2011. Chrysler plans to hike its full-year profit forecast after the third quarter and does not expect to see any slowdown in the second half.
Emanuele Bosio, chief executive of Italian car components maker Sogefi, told Automotive News that Marchionne's strategy to bet on North America while Europe is weakening “makes sense as things stand now.” Bosio added that Sogefi likewise is bullish on North America, and does not expect Europe to recover soon. Sogefi plans to increase its revenues from outside Europe to 50 percent in 2015 from 30 percent in 2011 by expanding in North America.