MILAN - Fiat Group CEO Sergio Marchionne on Thursday affirmed the Italian automaker's "unwavering commitment" to its proposed alliance with Chrysler, but was categorical Fiat won't put in cash at this stage.
Marchionne told an analyst conference call after the company announced a first quarter loss of euro 410 million (US$531 million) that Fiat would not put in cash for a minority stake.
It would only consider committing cash further down the road "at the relevant time as the need arises" for an industrial collaboration that would be of benefit to Fiat.
Fiat Group SpA is offering fuel-efficient powertrain and other technology that will help Chrysler expand into the small car market in return for 20 per cent of the U.S. automaker ahead of an April 30 deadline set by U.S. President Barack Obama's automotive task force.
"I see no reason why it cannot happen. I can only confirm our unwavering commitment to get this transaction done. We seen benefits to both Fiat and to Chrysler," said Marchionne, who has travelled several times to the United States to work on the deal.
"We need to work on helping Chrysler recover from this crisis," Marchionne said, with technology, management support and entry into European markets. Marchionne has said in the past that he would be willing to take on the job of Chrysler CEO if necessary.
Analysts pressed on whether Fiat would be willing to put up any cash -- something that Chrysler debtholders are reportedly seeking.
"For the same reason Morgan Stanley wouldn't lend any money to Chrysler," Marchionne shot back. "I think we do bring sufficient technology and know how to this organization to justify acquiring an equity stake ... This whole notion of attaching cash to the introduction of Fiat into Chrysler is something I find really unjustifiable."
Asked about reports Fiat is set to buy General Motors holdings in Europe, Marchionne said he had nothing to announce and that there had been no direct contact between the two automakers as far as he knew. "If an opportunity were to arise in a tangible way we would give it a really hard look, but I don't think we are there yet," Marchionne said.
Roland Koch, the governor of the German state of Hesse, on Thursday named the Turin-based Fiat as one of the potential investors "lining up" to invest in GM's subsidiary Opel.
Marchionne reiterated his position that a consolidation of the auto industry would eventually leave only producers that can make 5 million to 6 million cars a year, and that can get 1 million cars out of any single platform. And he said the Chrysler deal was one means to that end for Fiat.
The U.S. government has said that Chrysler will be sold off in pieces if the April 30 deadline was not met. Marchionne refused to respond to a question on whether Fiat would in that instance be interested in Chrysler assets, saying the focus was on getting the deal done.
Fiat Group earlier Thursday reported its first quarterly loss since the turnaround engineered by Marchionne, who took over in 2004 and ended a 17-quarter run of losses.
The Marchionne turnaround centerd on shedding non-core businesses, trimming management, signing more than 30 strategic industrial alliances to share costs and enter new markets, and launching a series of successful new models, including the hot-selling update of the iconic 500, or Cinquecento in Italian.
He would like to launch that car in the United States under the Fiat brand, along with reintroducing Alfa Romeo -- something that would be done under the Chrysler alliance.
Fiat said its net profit dropped euro 410 million ($531 million) in the first quarter, its first quarterly loss since 2004, compared earnings of euro 405 million in the first quarter of 2008, as a result of the plummeting out of car sales.
Despite the difficult market conditions, the Italian automaker, which manufactures cars under the Fiat, Lancia and Alfa Romeo brands, confirmed a minimum trading profit -- or operating earnings excluding one-time pluses and minuses -- for the year of euro one billion, noting that demand for cars is expected to improve throughout 2009.
Fiat shares, which have nearly doubled since the Chrysler deal emerged in January, closed down 0.8 per cent at euro 7.415 ($9.68) in Milan trading.
Fiat Group revenues were down 25 per cent to euro 11.3 billion ($14.63 billion) from euro 15.07 billion, with volumes decreasing across all businesses, which also include Iveco trucks and CNH agricultural and construction equipment.
Auto analyst Max Warburton at Bernstein expressed concern that Fiat may ultimately have to sell "jewel" assets like CNH and Iveco to fund auto industry expansion.
"The sale of Fiat's reportedly extraordinarily ambitions suggest to us that fund raising is inevitable -- even if Chrysler and Opel are initially available 'for free,"' Warburton wrote in a note.
But Marchionne told Warburton on the conference call that Fiat would not sell off assets to support the car side, saying that would be getting it backwards since the car business was the more troubled side.
