Now PSA is on the mend, the finance market turns to Fiat
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  1. #1
    1000+ Posts gerry freed's Avatar
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    Default Now PSA is on the mend, the finance market turns to Fiat

    The head of Fiat, in justification of their Chrysler acquisition, stated that one needs to build at least 6 million cars a year to stay in the race. Three years later they have gained full control of Chrysler and now say that they are aiming at 7 million cars in 2018. They currently are running at 4.4 million and are just profitable but not able, like PSA, to generate the growth from internal cash flows.
    Their position is different to PSA in several critical areas.
    They own many more brands and while searching for more volume risk diluting the scale advantages. In this game, diversity of models is a negative. They have a presence in the USA, the world's second largest national market but are relatively weak in China and other fast developing markets.
    They own Jeep, arguably the definitive brand of the SUV and this is seen as a major growth area. They are hoping to revive Alfa Romeo but financial analysts are unimpressed. Chrysler has faded in the US following the industry crash and their hopes of doubling its sales from a modest base are considered feasible. Currently the Fiat brand is lagging behind their projections of last year.
    The underlying concern is capital. They went 10 billion US into debt to buy Chrysler and need big investments to roll out the products that will provide the growths. They are talking of 55 billion US. The market analysts are sceptical that the money can be raised and suggest that the sales targes are unattainable.Their shares dropped nearly 10% last week. To raise cash they can relist Chrysler in the US and sell Ferrari. Like PSA had found, there is not an easy exit with access to greater volumes by merger or being taken over. The Fiat strategy has been acquisition and it will take several more years to find out if it works.

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  2. #2
    1000+ Posts gerry freed's Avatar
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    Fiat Chrysler have decided to put their corporate HQ in London.
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