Sergio Marchionne, the chief executive of Italian carmaker Fiat and its US subsidiary Chrysler Group, is set to outline revised two-year growth plans for both companies on October 30, 2012, to account for the decline in vehicle sales in Europe. Marchionne said it would be “nonsense” to assume that Fiat will confirm its outlook for Europe since the “market won't be there."
Fiat’s CEO said they will be updating their forecasts for 2013 and 2014. Marchionne is under pressure from Italian politicians like Prime Minister Mario Monti after Fiat dropped its Fabbrica Italia initiative.
Under the initiative, Fiat was to spend EUR20 billion ($26 billion) to increase production in Italy in exchange for labor concessions. Car sales in Europe dropped 8.5% in August 2012 (its 11th straight monthly decline), prompting several auto executives to remark in September that it is unlikely for the European market to recover within two years.
This remark raised concerns about Fiat’s ability to meet the targets that were set in its five-year growth plan disclosed in 2010. Marchionne outlined a distinct five-year plan for Chrysler in late 2009. Marchionne said that new Fiat-Chrysler revised plans will be unveiled at the end of October. They will also reveal an update of what they think will happen in 2013 and 2014.
Fiat is currently relying on the strong sales posted by its majority-owned Chrysler unit in order to cope with slumping demand for vehicles in Europe. The combined Fiat-Chrysler group now accounts for over two-thirds of the Italian carmaker’s profits in the U.S. Fiat now holds a 58.5-percent stake in Chrysler, after initially controlling 20% in 2009.