Fiat Auto’s financial turnaround will reach top speed in 2006 and slow thereafter according to an analyst at Banca IMI, writes Dave Leggett.

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Analyst Sabine Blümel told just-auto that Fiat Auto’s strong financial performance this year is being boosted by the positive impact of key model introductions, most notably the Fiat Grande Punto.


“We believe that Fiat Auto is well placed to beat management’s original target of selling 360,000 Grande Puntos in 2006 in view of the fact that 88,000 units were sold in the first quarter despite the fact that the model was not fully available in all European markets,” Blümel said.


“Marchionne’s 2006 targets look cautious and we are forecasting an EUR250m trading profit – a 1% margin – for Fiat Auto this year, which compares with a EUR281m loss in 2005.”


“But growth in Fiat Auto trading profit is forecast to slow considerably in 2007 and 2008 due to limited cost cutting opportunities, a narrow product portfolio, limited geographic reach and the effects of increased competitive pressures in the European marketplace.”

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“New model introductions planned by Fiat in 2007 and 2008 will have a less beneficial impact on profitability than the Grande Punto has,” maintains Blümel.


“For example, Fiat’s future C-segment model, called Bravo, which will replace the Stilo in late 2006/early 2007 has a low volume target of just 120,000 sales a year, reflecting Fiat management’s own realistic assessment of Fiat’s poor brand image which lacks credibility outside of small cars.”


Banca IMI forecasts Fiat Auto trading profit in 2007 at EUR420m and EUR600m in 2008. Fiat will report its second quarter financial results later this month.


Dave Leggett