27.07.2004 Fiat's top management team spoke to financial analysts yesterday at Balocco, outlining their plans to radically restructure the auto division as a return to profitability is targeted

Fiat's senior management team spoke to financial analysts yesterday at Balocco, near Vicenza, outlining their future for the industrial giant.

Auto division CEO, Herbert Demel, in his first major presentation since replacing previous incumbent Giancarlo Boschetti, painted an upbeat but cautious picture of the future.

By 2007, the former Audi CEO expects the carmaking arm to have increased its share of the Italian market to around 30.5%, up more than 2.5% on present penetration.

Throughout Western Europe this will increase to 8.2% from the current 7.4%, while in the former Eastern bloc nations the present 11.2% share will gradually rise by around half a percentage point. In Fiat's strategically important Brazilian market, the share will remain around the present level of 25%.

The new senior management team revealed major top-level restructuring throughout the Group. Sergio Marchionne, the recently installed Group CEO commented that "there is a phenomenal web of structures needing simplifying".

The former boss of Swiss certification firm SGS, who came to Fiat with a big reputation for getting things done, has been unimpressed by the standards of Fiat management, believing that many fall short of what is required of a large international business.

While he predicts a group break-even by the end of this year, he poured cold water on the idea that the auto division could make an operating profit next year, rather he sees this coming about in 2006.

A new, simplified structure for the car arm was unveiled, which will see most of the individual brand's activities centralised. The reorganisation will leave the current business unit identities remaining purely for specific marketing purposes. "This will," said Demel, "increase the technical synergy and speed at which the programmes are carried out."

There will be a much greater sharing of components and technology between the three major brands: Fiat, Alfa Romeo and Lancia. Major cost savings will be targeted by the increased carrying over of parts from one model generation to the next. Fiat's average of 30%, compares woefully with the highly efficient Japanese giants who achieve close to 70%. Ferrari's lower-level sportscar marque Maserati will also target component sharing with the Fiat brands where strategically viable.