The decline in Fiat Group Automobiles S.p.A.'s trading profit is a result of the drop in light commercial vehicle sales, according to Fiat CEO Sergio Marchionne.
He said that selling more passenger cars and fewer LCVs last year is the primary reason for a 456 million euro ($641 million) price-mix-related decline in the auto unit's trading profit (operating margin before extraordinary items).
Overall, the Fiat auto unit's trading profit dropped 32% to 470 million euros from 691 million euros in 2008. The decline came despite achieving a 230 million euro saving in purchasing costs.
Last year, sales of the Fiat's LCV unit, Fiat Professional, fell by 102,000. The 100,000-unit increase in Fiat's passenger-car sales was unable to make up for the loss.
In a call with financial analysts on January 25, Marchionne said that when you replace 100,000 LCV sales with 100,000 passenger-car sales, the level of profitability is not the same.
Sanford Bernstein automotive sector analyst Max Warburton said that LCVs such as the Fiat Doblo are among Europe's most profitable vehicles with margins of about 10%. Fiat Professional's 2009 sales fell 25.1% to 307,000 units from 409,000 units in 2008. Fiat's overall LCV sales in western Europe last year dropped 27.4% to 1.42 million units from 1.95 million in 2008.