Fiat S.p.A. CEO Sergio Marchionne says that the Italian automaker will reach its target of selling between 5.5 million and 6 million vehicles with newly acquired Chrysler Group. The announcement came during Marchionne’s appearance at the Frankfurt Auto Show on Wednesday.
Marchionne has set 5.5 million annual sales as the minimum needed for the survival of the new venture. Current sales stand at an annualized rate of 4.2 million.
The outspoken Marchionne also admitted that the Chrysler restructuring has been a slow and difficult process – more so than he had anticipated – but remained hopeful that significant progress could be made as early as next year.
By late November, Chrysler is expected to present its five-year business plan which will detail the company’s road map for returning to profitability following two years of decline.
Marchionne said emphatically, “We have to be absolutely clear about what we want to do with Chrysler and as a management team, where the organization is going to be in five years.”
Regarding the five-year plan, he said, “We will share significant milestones, numbers and we will show how we’re going to come out of this. This is a big issue and we’re working really hard.”
This past June, Chrysler emerged from an expedited bankruptcy under the control of Fiat S.p.A. The Italian automaker received a 20% stake in the company. Fiat’s small car technologies are expected to help the struggling U.S. automaker compete in the emerging marketplace with its increasing focus on green technologies and increases fuel efficiencies. Under the restructuring agreement, no money changed hands.
Despite Chrysler’s cash-strapped situation, Marchionne said that Fiat has no plans to invest financially in Chrysler and that he is hopeful that the company will not need to secure outside capital.
In an indictment of Chrysler’s former management, Marchionne said, “We were surprised by how little had been done in the past 24 months.” He also confessed, “It will be a slow progress in the beginning but we will see significant improvement in 2010.”
He anticipates industry-wide sales in the U.S. to surpass 11 million units in 2010. That figure would place total U.S. sales at 1 million above the expected 2009 total, but Marchionne cautioned that additional capacity could be cut if North American demand remains flat.
He said, “If the numbers end up being as we see today, there is a good chance we will have to put additional stress on the manufacturing system. But it’s too early to tell.”
He also said that Fiat no longer has an interest in acquiring GM’s Opel division. “I’ve completely closed with Opel,” he said. Fiat was among the earliest bidders on General Motor’s Opel/ Vauxhall operations which now appear on track to be purchased by Canadian-based auto parts supplier Magna International, Inc. and its Russian partner, Sberbank. That acquisition is expected to be finalized this fall.