> News in English > News

Fiat spins off automotive division

New five-year business plan unveiled

21 April, 18:33
Fiat spins off automotive division (ANSA) - Turin, April 21 - Fiat on Wednesday announced it will spin off its automotive division within the next six months by creating a new entity for its farm and construction vehicle division CNH and bus and truck-maker Iveco.

The announcement was made by CEO Sergio Marchionne during the unveiling of the group's new five-year business plan and came a day after Luca Cordero di Montezemolo stepped down as Fiat chairman and passed the helm of the group to John Elkann, heir to the company's founding Agnelli family.

Fiat Group Automobiles will thus remain in the original Fiat Spa group together with the automotive part of Powertrain - the division which develops and produces engines and transmissions - and Fiat's components sector.

"For years investors have been asking us to spin off our automotive division and now that we have completed our restructurization program there is no reason to keep such different sectors together," Marchionne said. "As two separate companies each will be able to make the best choices and act independently. In this way the automotive group can compete on equal footing with other constructors and develop common, cost-saving projects with Chrysler," he explained.

Fiat obtained 20% and management control of Chrysler in 2009 and once certain benchmarks have been met, including producing its own cars in the US, can expand this first to a maximum of 35% and later, once government bailout loans have been repaid, to 50% or more.

Last week, Marchionne said Fiat expected to boost its stake in Chrysler to 35% within the next two years.

CNH and Iveco, together with the remaining part of Powertrain, will become Fiat Industrial, a new company which will be listed on the Milan stock exchange.

According to Marchionne, this new group "can continue its recognised role in the farm and heavy machinery sectors. CNH is the world Number Two in the farm sector, Number One from a geographic standpoint, while IVECO just needs to break into the US market".

The operation, for which Marchionne said he saw no significant obstacles, will be set up between May and the end of June for approval by the Fiat board by October to allow for a listing in November. Confirmation of the spinoff, which had been widely expected, had an immediate effect in Milan where Fiat's shares leapt 3.5% with 11.1% of the group's stock capital changing hands.

Fiat's new business plan, Marchionne observed, "represents a unique chance to break with the past and embark in a new era.

This is a once-in-a-lifetime opportunity". During the presentation of the new plan, Marchionne, who is also Chrysler's CEO, said that before the end of 2014, Fiat and Chrysler together will sell a total of six million vehicles, "the minimum needed to be a competitive global player".

"Our partnership with Chrysler was a fundamental step for Fiat's future because it will allow us to achieve an adequate critical mass to obtain major savings, increase the volume of sales of individual platforms, exploit every possible joint savings and expand our geographic presence," he explained.

Despite's expansion abroad, the CEO said Fiat's roots "are and will remain in Italy," where by 2014 the group plans to produce 1.4 million vehicles a year, up from 650,000 in 2009, with 65% for export compared to 40% in 2009.

Over the next five years Fiat will invest 26 billion euros worldwide, plus an additional four billion euros for research and development, bringing the total to 30 billion euros, Marchionne said.

"This is an enormous investment, equal to two thirds of Fiat's global business," he added.

The new plan also calls for Fiat launching ten new models and redesigning six of its cars by 2014, while Alfa Romeo will unveil seven new cars and redesign two other models. During the presentation, Marchionne also touched on labor relations and said existing union accords were "inadequate" for the goal of the new business plan, adding "we need to redefine them".

The success of Fiat's plan, the CEO explained, depends on the flexibility of the group's labor force and of management.

"This is indispensable because the plants can operate only if they do so at full capacity," Marchionne said.

It was important that unions accept the new plan, the CEO added, "because a Plan B already exists and it's not pretty".

"I remember hearing horror stories about American unions but I can tell you, that once we worked things out and agreed on a plan, they never objected to what I did in the company's interest. An open mind and the desire to move forward are fundamental and I hope it will be the same here," Marchionne said.

Top News

    • 13:09
    • 09 apr
    • ROMA

    Fecondazione eterologa, cade il divieto

    La Corte Costituzionale lo hanno dichiarato illegittimo
    • 12:09
    • 09 apr
    • MILANO

    Intesa paga 294 mln 'tassa Bankitalia'

    Segue Unicredit (196), ma su parametri patrimoniali impatto soft
    • 11:40
    • 09 apr

    Papa: tacciano le armi in Siria

    Dolore per assassinio gesuita Van der Lugt e per vittime guerra
    • 10:43
    • 09 apr
    • MILANO

    Garlasco: mamma Rita, ho ancora fiducia

    E' cominciato il processo d'appello bis, Stasi è in aula
    • 09:03
    • 09 apr
    • MILANO

    Borsa: Milano apre in rialzo, +0,24%

    Identico aumento per l'indice Ftse All share
    • 09:00
    • 09 apr
    • ROMA

    Immigrazione: Alfano,un morto su barcone

    Continuano sbarchi, 4.000 migranti soccorsi in ultime 48 ore
    • 07:01
    • 09 apr
    • ROMA

    Mafia, colpo a cosche in E-R

    Operazione cc regione e Crotone,13 ordinanze,sequestro da 13 mln
    • 06:36
    • 09 apr

    Pakistan:bomba a mercato,almeno 15 morti

    Ordigno ad alto potenziale in zona controllata forze sicurezza
    • 01:05
    • 09 apr
    • ROMA

    Immigrazione: Alfano, è allarme sbarchi

    Non bastano 80 mln Ue per Frontex. Def grazie a nostra azione
    • 00:23
    • 09 apr
    • NEW YORK

    Australia e Svezia, paradisi per giovani

    Secondo studio Usa. Italia fuori da classifica prime 30 nazioni