by Jon LeSage, remarketing editor for Automotive Digest
It’s a critical time for the Fiat and Chrysler merger as the Chrysler IPO should be coming up soon.…
Sergio Marchionne, chief executive of Fiat and Chrysler, is counting on a merger of the two companies as Fiat’s financial performance gets hit.
Fiat’s third quarter profits were hurt by slumping sales in South America and continued hardship in Europe, but Chrysler had strong results.
Chrysler saw net income rise 22% to $464M on a 13.5% rise in revenue. Fiat’s performance undershot profit estimates for the quarter and cut its 2013 forecast by 16%.
Europe is seeing its worst car slump in two decades. Brazil is a big overseas market for Fiat, where the automaker saw revenue fall 17% and profit more than halved.
Marchionne would like to see the two companies merge to better compete with global majors GM and Volkswagen.
His efforts have been undercut by union healthcare trust Veba, which owns 40.5% of Chrysler not held by Fiat; Veba has demanded that some of its holdings be listed on the stock market.
Marchionne is having to drum up support for an initial public offering he’d rather avoid. He has said it will take place before the end of this year.
In documents filed for the IPO, Fiat warned Chrysler that the IPO meant the Italian automaker is reconsidering terms for technology and design sharing, which could threaten potential synergies needed in the merger.
Marchionne has been credited for creating a partnership and integration between Fiat and Chrysler, avoiding the mess that happened not long ago with Daimler not treating Chrysler as an equal partner.
An example of this could be his appointment of Detroit-based Saad Chehab from running the Chrysler and Lancia brands to also being named global marketing chief of Maserati. That’s an important new position for Fiat, which expects the Italian luxury brand Maserati to produce major sales and profit growth over the next few years.