Truck Strike, Weak Pricing, Sagging Sales Undermine Bottom Line
Fiat is feeling the pressures of a European sales sag and weak pricing being made worse by a truckers strike that has cost it an estimated 20,000 in lost sales, and this may mean a loss in the first quarter, according to Deutsche Bank.
“This development (truck strike) falls on top of a very challenging market development in some core markets such as Italy with sales declining double digit for Fiat. We estimate that the lost 20,000 units alone generate lost profit contribution of some €60 million,” said Deutsche Bank analyst Jochen Gehrke.
“As the pricing environment seems to have further worsened for the brand and the Brazilian market is equally no positive support, we believe that it appears likely that Fiat Auto will again produce a negative trading profit in the first quarter,” Gehrke said.
Backburner
Fiat meanwhile put any alliance talks on the backburner until next year while it tries to sort out its own problems and extends its operations in China and Russia, according to Reuters.
Reuters, quoting “persons with direct knowledge”, said Fiat had talked with Peugeot before the French company threw in its lot with General Motors. The report also pointed to Fiat’s apparent cash balance of €20.7 billion, which will help it ride out weak markets in 2012.
Neil Winton – April 2, 2012
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