Rome

Fiat-Chrysler alliance profitable for Turin giant

Italian icon continues merger preparations

Fiat-Chrysler alliance profitable for Turin giant

(By Sandra Cordon)Rome, April 15 - Italian icon Fiat, which once rescued bankrupt American automaker Chrysler, is continuing preparations for a full merger with the division that has become increasingly important to its bottom line. Sergio Marchionne, chief executive officer of Turin-based Fiat, says that the integration of the two companies is coming, but the timetable is not yet clear. "The merger with Chrysler is inevitable," Marchionne told a recent shareholders meeting. "I hope that by the end of the year, we will have more certainty about how to achieve it". Fiat took over bankrupt Chrysler in 2009 and, with an initial 20% stake in the company, turned its fortunes around. It now owns about 60% of Chrysler which these days, thanks to its strong sales in North America, is helping to keep Fiat afloat. Marchionne has frequently said that a full merger between Fiat and Chrysler is necessary and many expect it will occur by the end of 2015. However, the challenge for the automaker is finding the revenues for Fiat to finalize the transaction. The recession in Italy, which has caused a big drop in spending, and financial troubles across Europe have taken their toll on Fiat. While Fiat - which was born in the northern city of Turin more than 100 years ago, in 1899 - is keeping a strong market share in Italy, its profits have been hit hard by the continent's economic troubles. However, the overall balance sheet has been supported by strong earnings from the Chrysler division. Sales of Chrysler models have increased by 5% in the United States in March 2013 compared to March 2012, carving a new record of 36 straight monthly gains. The previous record had been set between February 1992 and December 1994. Sales of the Fiat 500 in the United States rose 3% in March compared with March 2012, the 13th straight gain for the new version of the iconic sub-compact. Marchionne has said that profits for fiscal 2013 are expected to come in at between 1.2 billion euros and 1.5 billion euros ($1.5 million US to $1.9 million US) on revenues between 88 billion euros and 92 billion euros. And while 2012 was the worst for vehicle sales in Italy since 1979, Fiat still managed to nudge up its market share at home. Marchionne has said vehicle deliveries this year for Fiat and Chrysler combined should reach somewhere between 4.3 million to 4.5 million. That's a significant increase from last year's sales of about 4.2 million autos, which make the combined companies the seventh largest automaker in the world. Growth is again expected this year in North America - forecast to account for about half of 2013 sales - as well as expansions in Latin America and Asia, while sales in Europe are forecast to decline. Last year, Fiat and Chrysler sold 2 million vehicles in North America, 1 million in Europe, 979,000 in Latin America and 115,000 in Asia. Fiat designs, produces, and sells vehicles all over the world under such well-known brand names as Fiat, Alfa Romeo, Lancia, Abarth, as well as luxury and performance brands Ferrari and Maserati. It is also involved in producing auto components through Fiat Powertrain, Magneti Marelli, Teksid, and Comau.

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