Fiat dealers seeking help from Marchionne due to poor sales

Article by Christian Andrei, on December 24, 2010

Amid the excitement of the holidays, it is quite remarkable that Fiat S.p.A.’s showroom is nearly empty. But the carmaker pointed out that those who are coming in the showrooms as potential buyers are serious about looking for a vehicle. Cristina Fermi, a sales assistant at the dealer, said that the consumers visit several dealers in order to determine the best offers.

She explained that this risks cannibalizing the market as carmakers may be at a losing end as they try to get a new client.

The Italian dealers' association said that within the next 18 months, about a third of Italy's 3,600 dealerships may go bankrupt; hence, the loss of about 15,000 jobs with them, as car sales decrease dramatically after the expiration of government incentives.

Last month, deliveries in the country, Fiat's largest market and Europe's third-largest auto market, decreased by 21% last month. On Oct. 21, Fiat CEO Sergio Marchionne told analysts that auto sales in Italy will continue to decline in the first quarter.

Marchionne declined to provide further details. Marchionne said that for the upcoming year, Fiat's Italian business will continue to be profitable this year. Currently, the Italian market is waiting for Fiat's profit potential.

Fiat raised its 2010 forecast over the rise in demand in emerging markets. Last October, the company said that full-year trading profit will be at least 2 billion euros ($2.6 billion), an increase from its previous target of up to 1.2 billion euros.

On Jan. 3, the company, which also controls Chrysler Group, is dividing into by spinning off its industrial business. In a note to clients Nov. 22, Bank of America Merrill Lynch analysts led by Fraser Hill said that 30% of sales are exposed to an Italian car market and that it might fall 7% in 2011. With these factors to consider, he believes that the outlook is tough. [via autonews - sub. required]

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