European banks downgrade Fiat, share prices tumble

[nruggiero]

By Zach Bowman
Posted Nov 23rd 2012 9:56AM

Shares of Chrysler parent company Fiat SpA fell by 5.9 percent on Tuesday. Two European banks downgraded the company's stock, with UBS AG dropping the company's stock from a "buy" rating to "neutral." Likewise, Deutsche Bank cut the company's shares from "hold" to "sell" amid concerns that the company will need a new cash infusion to fund CEO Sergio Marchionne's plans for the automaker. Marchionne has made it clear he plans to purchase the remainder of Chrysler, which will require Fiat to raise somewhere between 1.6 billion and 2.9 billion euros. That's due in part to the fact that the company may have to start paying fair-market value for Chrysler stock as the company's initial public offer grows near.

Bloomberg reports Marchionne is keen to increase the Fiat stake in Chrysler in order to access the profitable North American manufacturer's cash flow. Fiat could then use those funds to jump start its ailing European operations, though Marchionne has been quoted as saying Fiat doesn't need Chrysler's cash to bring its EU business in line. Last quarter, Fiat reported 20 billion euros of available liquidity, down from 22.7 billion euros at the end of June.

http://www.autoblog.com/2012/11/23/e...prices-tumble/

[Syclonus]

By Zach Bowman
Posted Nov 23rd 2012 9:56AM

Shares of Chrysler parent company Fiat SpA fell by 5.9 percent on Tuesday. Two European banks downgraded the company's stock, with UBS AG dropping the company's stock from a "buy" rating to "neutral." Likewise, Deutsche Bank cut the company's shares from "hold" to "sell" amid concerns that the company will need a new cash infusion to fund CEO Sergio Marchionne's plans for the automaker. Marchionne has made it clear he plans to purchase the remainder of Chrysler, which will require Fiat to raise somewhere between 1.6 billion and 2.9 billion euros. That's due in part to the fact that the company may have to start paying fair-market value for Chrysler stock as the company's initial public offer grows near.

Bloomberg reports Marchionne is keen to increase the Fiat stake in Chrysler in order to access the profitable North American manufacturer's cash flow. Fiat could then use those funds to jump start its ailing European operations, though Marchionne has been quoted as saying Fiat doesn't need Chrysler's cash to bring its EU business in line. Last quarter, Fiat reported 20 billion euros of available liquidity, down from 22.7 billion euros at the end of June.

http://www.autoblog.com/2012/11/23/e...prices-tumble/

Damn shame.
Hopefully they can recover.

[sonjaab]

Bloomberg reports Marchionne is keen to increase the Fiat stake in Chrysler in order to access the profitable North American manufacturer's cash flow. Fiat could then use those funds to jump start its ailing European operations, though Marchionne has been quoted as saying Fiat doesn't need Chrysler's cash to bring its EU business in line. L

Didn't daimler do the same thing.................Drain Chryslers cash then dump them and RUN back to europe!

[GHull3]

Poor Chrysler...

[web_captain]

Poor Chrysler...

It seems to me that most of the people posting here have not yet understood what is the Marchionne's plan for a new Fiat in Italy (EU).

Up to now, Fiat was, say roughly, making 90% small cars and 10% large cars. Now that the situation is not happy, he has decided, wisely IMO, not to close existing plants but to keep on making cars, but this time making 90% large cars and ONLY repeat ONLY 10% small cars. That's a revolution in the evolution.
Why?
Because, thanks to the alliance with Chrysler, Fiat can make in Italy the cars that are needed for US and export them to the states under a 'preferred' pact with the italian govt. (say towards US and other countries too, where said cars are requested).

This doesn't mean that US plants will diminish their output, but that for some models, the production will be made in Italy too: say for EU, too, and without at the moment creating NEW plants abroad. Is this clear? FIAT will use its existing plants that actually are only partially utilized.

Actually Fiat can solve his problems without Chrysler's group cash: CEO has to change the existing situation in Italy by himself.

And what above is possible because of the alliance with its american partner, obviously!
And about the merger, that will be done with an healthy Fiat, as Marchionne has already stated. So no fear at all for Chrysler.

PS: Canada ==> highest cost in carmaking ... (remember what happened time ago there? not a good experience for carmakers) - Italy ==> among the lowest cost in EU.

Marchionne is an economist and a lawyer.

[adaptabl]

It seems to me that most of the people posting here have not yet understood what is the Marchionne's plan for a new Fiat in Italy (EU).

Up to now, Fiat was, say roughly, making 90% small cars and 10% large cars. Now that the situation is not happy, he has decided, wisely IMO, not to close existing plants but to keep on making cars, but this time making 90% large cars and ONLY repeat ONLY 10% small cars. That's a revolution in the evolution.
Why?
Because, thanks to the alliance with Chrysler, Fiat can make in Italy the cars that are needed for US and export them to the states under a 'preferred' pact with the italian govt. (say towards US and other countries too, where said cars are requested).

This doesn't mean that US plants will diminish their output, but that for some models, the production will be made in Italy too: say for EU, too, and without at the moment creating NEW plants abroad. Is this clear? FIAT will use its existing plants that actually are only partially utilized.

Actually Fiat can solve his problems without Chrysler's group cash: CEO has to change the existing situation in Italy by himself.

And what above is possible because of the alliance with its american partner, obviously!
And about the merger, that will be done with an healthy Fiat, as Marchionne has already stated. So no fear at all for Chrysler.

PS: Canada ==> highest cost in carmaking ... (remember what happened time ago there? not a good experience for carmakers) - Italy ==> among the lowest cost in EU.

Marchionne is an economist and a lawyer.

The point is the cost per hour may be higher than in Italy but the productivity in Canada is 3 times higher than in Italy. It take 3 times the man hours to produce a car in Italy than in Canada. Sounds like Marchionne is trying to play both sides against each other. In hopes that both sides will accept lower wages. I don't think it will work. The CAW told him to stick his ideas where the sun doesn't shine and there will be no two tier wages in Canada. Let's hope the UAW uses this contrat as a basis and kills existing two tier wages also.