Fiat's carmaking division has trimmed its losses to 85 million euros during the third quarter of 2005, the Group's financial report - issued yesterday - has revealed. It marks a huge turnaround from the equivalent period of 2004, when the losses came in at 282 million euros. Revenue, at 4.6 billion euros, was up by 0.6 pct, helped by increased performances from its Brazilian operations.

The Fiat Group overall posted an excellent third quarter performance, turning in an 818 million euro profit which was helped in part by the sale of a major stake in energy company Edison (for 878 million euros), and the conversion of a 3 billion euro debt held by a consortium of creditor bank into shares, although it was hit by 420 million euros spent on restructuring, and another 284 million euros on other associated costs.

With Fiat's new star model - the Grande Punto - arriving too late to impact on the third quarter performance, and with the orders rolling in (35,000 have been received thus far), analysts believe that the miserable recent run of underperformances can be put behind the Auto Division by the year end and a small operating profit achieved. The amazing recovery - which really swung into action during the second quarter of 2005 - can be attributed to the ambitious strategy that new Group and Auto CEO, Sergio Marchionne, has quickly devised and begun to implement. Several of Marchionne's key strategies are clearly paying out. Some of these include lowering Fiat-held stocks, which at 77,000 vehicles in q3 2005, are at their lowest level for several years. Another area has been the major emphasis on concentrating on higher margin retail sales with more-profitable, top-specification options. Marchionne's investor presentation yesterday demonstrates that the Panda has seen upper trim levels being specified rising by 26 pct this year, while the Croma is seeing almost half cars bought (48 pct) being in top specification, almost double its forecasts, while the new Grande Punto is expected to see top trim levels being ordered at a rate of more than three times than were being specified on the existing Punto model it replaces.

With the corner now turned Fiat Auto are able to now concentrate firmly on its future the statement said, which recapped the alliances it now has in place with Peugeot-Citroen, Ford, Tata Motors, Suzuki and Tofas. "As part of its aggressive program to renew its product range, Fiat is planning on launching 20 new models and restyling an additional 23," the report read, adding that, "Between 2005 and 2008, Fiat will invest € 10 billion to support this plan, including € 4 billion in R&D. So as to further strengthen the Automobile Sector, Fiat continued to seek strategic alliances with major partners. Fiat recently signed two memoranda of understanding, with Ford and with the Indian group Tata Motors Ltd, to study collaboration opportunities. The talks with Ford are aimed at assessing the feasibility of jointly developing two new vehicles in the small car segment (the future Fiat 500 and the successor to the Ford Ka), while the agreement with Tata would focus on broader cooperation in the automotive arena, including development, manufacturing, components, purchasing and distribution. In October, Fiat signed a letter of intent with Suzuki Motor Corporation (SMC) to study the feasibility of licensed manufacture of the new Euro 5-compliant 2.0 JTD Multijet diesel engine, developed by Fiat Powertrain Technologies."

The new Fiat-branded, Suzuki-built SUV - to be called the Sedici - "will debut in conjunction with the Turin Winter Olympics in Q1 of 2006", after being presented to the press in late November (along with the Alfa Romeo Brera and the Fiat Panda SUV).
 

Maserati also trimmed its losses year-on-year slightly, while turnover was up a massive 37 pct, due mainly to the success of the Quattroporte. Ferrari's turnover was up 18 pct, due mostly to the instant popularity of the new F430 Coupé and Spider, while q3 profits rose by 12 million euros to 42 million euros.

MARCHIONNE "ALFA BRAND IS A PRIORITY"

In a telecast conference call following the release of the q3 report, Sergio Marchionne emphasised that rejuvenating the flagging fortunes of the Alfa Romeo brand would be a top priority now. Marchionne said the "BMW has been seen as the most important single competitor for Alfa Romeo models, but there is other competition from VW's Golf. We haven't paid enough attention to what they have done. We need to respond to competitive pressures from VW in the market place."

The Alfa 147 range - which will be bolstered by a more competitive 'entry level' model - will now be repositioned to directly compete with the VW Golf , the German best-seller. Marchionne emphasised, that the Golf was the 'benchmark' model in the segment, and that the Alfa 147 should be taking sales from it.

An in-depth survey has recently been carried out into Alfa Romeo's current marketing situation, and a report due in early December, will outline exactly how the brand will distribute its cars in the future. Marchionne also added that with the financial corner now turned, the whole Fiat Auto network across Europe will now come in for attention. And with the exodus of dealers now stemmed, he believes the platform does exist to begin to increase the division's Europe-wide sales. The accompanying investor presentation reiterated again that the Alfa Romeo brand will be the immediate focus of attention.

MARCHIONNE "FIAT WILL RE-ENTER THE BOND MARKETS"

During the conference call Marchionne stated that Fiat will re-enter the bond markets, although it will only happen when the conditions are right. "We will re-enter the bond market," he said, adding that "the timing will be at our discretion. We are not going to screw it up." Marchionne added that entering the bond market would be a key factor in Fiat's long-term industrial planning.

NEW LOGO FOR THE FIAT GROUP

The Fiat Group has taken on a new logo, reports new agency AGI. "The logo is square shaped, with a silver background that sports a blue lettered "Fiat Group" inscription separated by a thin red line. The new logo is designed to convey the company's car manufacturing vocation; a streamlined company structure; and a radical change in company philosophy towards greater technological turnover. According to graphic designers the square-shaped logo aims to convey rationality and soundness; the silver hints at technology; the blue lettering is a reminder of the company's old logo; while the thin red line draws attention to the logo and breaches the sense of enclosure engendered by the square outline," adds AGI.