Blog: Dave LeggettFord and Fiat

Dave Leggett | 29 January 2007

The 2006 end-year financial results are starting to come in now. Ford’s results were pretty bad, a little worse than most analysts expected, but not all that surprising.

The daunting size of the turnaround job ahead is reinforced by Ford’s own rather downbeat (or realistic) forecasts for its performance over the next few years. There’s no doubt about it: it will be a long and hard slog.

But car companies in dire financial straits can be turned around.

It wasn’t all that long ago that Fiat Auto was seen as a basket case threatened with extinction. It has just posted a profit for 2006 that exceeded expectations.

Okay, GM gave Fiat a head start with that hefty payoff a few years back, but since then there has been restructuring, overseas operations have improved and Fiat finally got its act together on the product side to address a sales slide in Europe. Grande Punto has been at the centre of Fiat’s strong 2006 performance.

Fiat brand car sales in Europe were up by an impressive 21% last year and Alfa was up 12%. That’s impressive. The challenge for Fiat now is maintaining momentum as the recent product-driven boost subsides (new Fiat Bravo is a crucial model this year, in terms of taking up some of the slack).

But Fiat’s turnaround shows what can be done in a fairly short period of time with effective leadership and organisation.

GM has at least started to recover at the bottom line. Ford is a bit further behind and looking at a long journey ahead.

Fiat’s Marchionne can deservedly take the plaudits now. It could be Mulally in 2010, standing tall at the January results conference, describing Ford’s return to profitability in 2009. Plenty needs to happen between now and then, but it’s all to play for.

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