Lack Of New Models Hampers Fight Against Renault, Peugeot
New (Smaller?) Goals For 2013, 2014 Expected On October 30
Fiat’s losses in Europe are accelerating towards €800 million for 2012 and prospects aren’t being helped by a lack of new models to face stiff new competition from the Peugeot 208 and Renault Clio, as it postpones spending on new cars.
Overcapacity is still a problem, despite a plant closure, as sales in Fiat’s home market whither.
That was the verdict from U.S. ratings agency Moody’s Investors Service, as it cut Fiat, and Peugeot-Citroen too, deeper into so-called “junk” status.
In the first half of 2012 Fiat lost €356 million in Europe, after losing €500 million in 2011. Fiat cut European capital spending for the year by €500 million. In the first nine months of 2012, overall sales on the Italian market dived 21.1 per cent to just over one million, according to LMC Automotive. AID data for the first eight months of 2012 shows Fiat/Chrysler market share in Western Europe at 6.6 per cent, down from 7.4 per cent in the same period of 2011.
“Fiat is facing significant overcapacities despite the closure of its factory in Sicily at the end of last year. In Moody’s opinion, Fiat’s target of reaching breakeven point in trading profits (from Europe) by 2014 has become very challenging in this much worsened environment, especially in the light of current year trading losses for the region which Moody’s expects at around €800 million for the current year,” the agency said in a statement.
Derail competitive position
“The delay in model renewals and the absence of any major new volume model launch might further derail Fiat’s competitive position in Europe, against the background of major new model launches from the Peugeot 208 and Renault Clio,” Moody’s said.
Fiat also renews its models more slowly than its direct rivals, and this has eroded its competitive position and has contributed to market share loses since 2010, Moody’s said. Competition in Brazil, Fiat’s most lucrative market, is also cranking up.
Moody’s said there is no relief in sight with no major volume car introductions in the next 12 to 18 months, while the low capacity use rate seems likely to continue.
Fiat/Chrysler CEO Sergio Marchionne said he will unveil an updated plan for 2013 and 2014 on October 30, after saying that it needs to change to take into consideration the ongoing slump in Europe’s sales
In 2009, Marchionne laid out a five year plan for Fiat-Chrysler which including a combined sales target of six million cars annually.
Neil Winton – October 14, 2012
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