Fiat Chrysler Automobiles sees Brazil site to boost profitability in the country

Article by Eugene Conan, on March 11, 2014

Fiat Chrysler Automobiles is expecting its new site in Pernambuco, Brazil to hike its profitability in the country by 2017, chief executive Sergio Marchionne said. "I'm absolutely convinced that by 2017, which will be the first year of full production at the Pernambuco plant, we will return to making double digit margins in Brazil," Marchionne said at the Geneva Motor Show.

The Pernambuco site is set to open in 2015, building models that better suit market demand, Marchionne has remarked. It will produce the Jeep Renegade and other models. The carmaker has already started producing the Renegade at a site in Italy. Brazil used to account for around a fifth of Fiat’s profit, helping to offset losses in Europe.

However, Brazil terminated car sales incentives, higher input costs and currency effects have weighed on profitability in the region.

FCA cut its 2014 profit forecast following an 80-percent drop in Latin American core earnings in the last quarter of 2013. Marchionne expressed optimism on the market recovery in Europe, but said he did not think underlying problems of oversupply had been cured, adding that production cuts were needed for the recovery to gain momentum.

"Supply issues still continue to be a big problem in Europe and we've only partially dealt with that," Marchionne said. The FCA CEO expects a new strategy that concentrates on Maserati and Alfa Romeo for exports to help offset some of the weak demand in its traditional markets like Italy. [source: Reuters]

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