Fiat CEO Sergio Marchionne says the auto maker has enough cash to purchase a remaining stake in Chrysler and become the American manufacturer’s sole owner. He also is seeking ways to make one entity out of the two companies.
“The last I checked the bank account there was enough money to try to deal with them,” Marchionne tells analysts and reporters during a discussion of first-quarter results. “Them” refers to the Voluntary Employee Beneficiary Assn., which still owns 41.5% of Chrysler.
Marchionne does not give a timeline for a VEBA buyout and Fiat-Chrysler merger to be complete. “I remain hopeful that we’ll find a solution with VEBA that meets their objectives and ours,” he says. “The dialogue is open. We will continue with the (initial public offering) track.”
He does say an IPO would open on the New York Stock Exchange with Milan as a secondary base. “It’s the most efficient capital market I can get my hands on. That is obviously my preference.”
Chrysler Group’s net income for first-quarter 2013 was $166 million, compared with $473 million year-ago. Marchionne blames the decline on production changeovers and slowdowns of key models, particularly the Jeep Grand Cherokee and forthcoming Jeep Cherokee.
The slump was expected, but Marchionne acknowledges the U.S. auto maker took a harder hit than it expected.
“I didn’t think we were going to limp that much,” he says. “The results are in line with what the plan sees for 2013, and we recognize the amount of pressure in the system to deliver the remainder of our operating profit objectives.”
Fiat Group net income took a similar downturn as the European market remains sluggish. The Italian auto maker earned €19.8 billion ($25.9 billion) in the first quarter, down 2% from year-ago.
“We have not seen the bottom of this market,” Marchionne says, although he did express confidence the economy would recover if European Union officials “get their act together.”
The Chrysler-Fiat CEO also emphasizes the significance of repositioning the Alfa Romeo and Maserati brands as worldwide luxury and performance leaders.
“We have stayed away from mass investment and are more focused on production on the premium end,” Marchionne says, alluding to recent power moves from competitors. “The Alfa Romeo brand has had a number of false starts in the past…but I don’t expect miracles out of (the European market) going forward.”
Another new development for both auto makers is the arrival of a revamped Chrysler 200, which Marchionne says is coming next year but declines to reveal anything further.
The launch of the midsize Cherokee SUV in coming months is crucial, he says. “It’s a complicated industrial launch for us. We won’t see retail numbers coming out of this until well into the third quarter.”
Marchionne adds that sales numbers for the recently refreshed Grand Cherokee are “favorable” and the midsize SUVs are sitting on dealer lots an average 23 days, well below the auto maker’s 66-day overall average. “I’m encouraged by what I see on the Grand Cherokee so far.”
