Fiat to secure new auto partner by year's end

[Variance]

Link: http://www.detnews.com/2005/autosinsider/0.../C03-306253.htm

Fiat to secure new auto partner by year's end

Analysts say Fiat needs an industrial alliance to help cut costs; carmaker rules out Asian company.

By Aidan Lewis / The Associated Press


TURIN, Italy -- Italian automaker Fiat Auto SpA, months after a breakup with General Motors Corp., plans to sign an alliance with another company by year's end.

Fiat Chief Executive Sergio Marchionne declined to identify the potential partner, only saying "the industrial alliance will not be with an Asian company."

Analysts say Fiat needs an industrial partner to help cut costs in the competitive auto market, which is often dragged down by too many factories and too many workers.

An alliance with GM collapsed in February, and Fiat has been saying it was looking for new partners.

"By the end of 2005 we will announce the first of Fiat's targeted alliances," said Marchionne.

Fiat is also pinning its hopes on the success of a new Punto, which was launched Tuesday amid fanfare in Turin, the northern Italian city where the company is based.

Marchionne said he thinks the new car will exceed Fiat's sales target of 360,000 units in 2006.

"We attribute to this car a great part of our ambition and our efforts to win new customers," Marchionne told reporters. With the launch of the Fiat Punto, Marchionne said, "Fiat is coming back strong, dynamic, and with its books in order."

However, he said that despite better results this year, "Fiat Auto in particular must further quicken the rate of its recovery."

Sportier and a few inches bigger than past models, the new model is known as the "Grande Punto."

"The Grande Punto is in fact the car we are counting on to close with the recent past and tell the market, our competitors, and our customers: 'Fiat is back,'" said Fiat Chairman Luca Cordero di Montezemolo.

Marchionne said Fiat Auto is investing around $12.5 billion in 20 new models between 2005 and 2008: the Punto, which represents around a quarter of the company's car sales, is expected to be the most popular.

Fiat has sold 6 million Puntos since it first launched the car in 1993. Four years later, it became the best-selling car in Europe.

The government was closely watching Fiat, one of Italy's top private industries.

Fiat Auto SpA, which has been losing money since 2000, is aiming to be in the black starting in 2007, while the Fiat group is hoping to post a net profit this year. Fiat Auto SpA accounts for about 40 percent of Fiat group's revenues.

Marchionne said Fiat will have cut its debt by $6.02 billion this year, helped by a cash settlement from GM after the two companies broke off an alliance in February, and by Fiat's sale of its stake in power company Italenergia.

[MyerShift]

So, basically, Fiat is looking for another automaker on which to foist itself upon. I've heard that Ford is the next victim. Edited September 22, 2005 by S.Myers