The ANNOTICO Report

GM had purchased 10% of Fiat with a guarantee to purchase the balance, back
when Euro expansion seemed like a good idea. Now with Euro and America
economy anemic, GM wanted to renege on its commitment.

Fiat, however "stood tough", and if GM wasn't going to bring its "global"
financial and marketing muscle to Fiat, then Fiat was going to make them
pay. Fiat "stared down" all the threats of the GM giant, and in the end, GM
Not only gave up the 10% share they had paid for, But paid Fiat $2 Billion
to be released from it's purchase agreement!!!

Now, Fiat, again an All Italian company will have to produce Better cars
Faster in better Designed models.
Fiat is Not only important to Italy's Economy, Fiat's success is a matter
of National Pride.

Fiat once controlled 60% of Italian auto sales but as trade barriers came
down and foreigners arrived in the car-mad country, Fiat Auto’s market
share slumped and last year hit an all-time low of about 27%.
Is that because Italians are buying Lamborghini, Maserati, Ferrari, Alfa
Romeo, and Lancias instead? :)

The Economic Times Online
Reuters
Monday, February 21, 2005

MILAN; Struggling Fiat appealed to national pride on Sunday, taking out
full-page newspaper adverts urging Italians to support their industrial
icon as it battles to revive car sales and return to profit.

“Keep cheering for us,” Fiat’s chairman and chief executive cried out from
the light blue page, the same colour as Italy’s soccer strip.

Fiat once controlled 60% of Italian auto sales but as trade barriers came
down and foreigners arrived in the car-mad country, Fiat Auto’s market
share slumped and last year hit an all-time low of about 27%.

The crash in car sales triggered Fiat’s worst-ever crisis and raised the
spectre that the Turin-based group could sell the auto unit to General
Motors, which already owned 10% and was fighting to avoid buying the rest
under a “put” option.

Last week, GM gave Fiat back its stake in Fiat Auto and $2bn for Fiat to
cancel the put option that allowed it to sell, leaving the Italians facing
a tough turnaround alone.

“Today is an important day for us, because today Fiat is totally Italian
again,” chairman Luca di Montezemolo and CEO Sergio Marchionne wrote in the
advert that ran on the back of every major newspaper.

“Or, if you prefer, Italy has taken back Fiat. It has taken back an asset
that has belonged to it forever. It has taken back a heritage that has been
part of our history, of our culture, for more than a century,” they added.
“It is an important step for us to face the challenges ahead. We believe in
ourselves. Keep cheering for us.”

Italians have long decried the demise of Fiat, the country’s largest
private employer and a symbol of pride in a nation where most businesses
are tiny on a world scale.

When Marchionne won the GM divorce, papers were full of praise for their
saviour, likening him to David beating Goliath.

But management knows that congratulations are not enough. Other adverts in
Sunday’s newspapers offered foreign cars with financing deals and free
offers that Fiat can’t afford and new, attractive models that Fiat can’t
offer.

Marchionne, who last week took over as Fiat CEO, knows the group needs to
produce better cars faster and has said he is looking for partnerships to
share development costs on new models with other automakers. Savings are
vital in Fiat Auto’s plan to pull back to profit in ’06 because car sales
are expected to remain flat this year.

New models often boost sales, but analysts say the Fiat Croma estate due
out in the spring is unlikely to rack up huge sales as Fiat is not a strong
player in the family-car segment. The new Punto, Fiat’s best seller, is not
due out until September.

Any new cars planned today will take about three years to flow down the
pipeline, so for now Marchionne has to work with launches planned by
managers who left the company through a revolving door that is still
turning.

Last week, Marchionne ousted Herbert Demel from the top spot at Fiat Auto,
and industry sources say Martin Leach, the head of Fiat’s sporty Maserati
marque, is due to follow this week.

The last thing Fiat needs is another change of management and strategy.
Papers reported that Marchionne held a weekend meeting with top Fiat Auto
managers and urged them to keep working on models, platforms and markets.

http://economictimes.indiatimes.com/
articleshow/1026521.cms