Fiat makes money, for a whole year, first time since '00

Michael N. Marcus · Post by **Michael N. Marcus** » Thu Jan 25, 2007 11:58 am

MILAN (Reuters) -- Robust sales of the Grande Punto hatchback and other models helped Fiat's main automotive business turn a profit in 2006, the first time since 2000 it has made money for a whole year.

Fiat said today the improved results at the business and elsewhere within the Italian industrial group had led the board to propose a dividend for the first time in five years.

It said it would pay a total of about $358.2 million (276 million euros) on three types of shares. For ordinary shares, the dividend would be 20 cents (15.5 euro cents).

Fiat highlighted 2006 as marking the end of a three-year struggle to recover from near bankruptcy. The turnaround has largely been attributed to CEO Sergio Marchionne, who has overseen cost-cutting, industrial alliances and the launch of new models.

Last year, Fiat posted the strongest sales growth among Europe's automakers in an otherwise flat market, and also beat its aim of seizing 30 percent of its Italian home market.

spidernut · Post by **spidernut** » Fri Jan 26, 2007 3:28 am

And Ford lost something like $2.4 Billion. Sure makes you wonder.

mdrburchette · Post by **mdrburchette** » Fri Jan 26, 2007 8:11 am

I'm glad they're getting turned around. I just hope the Big 3 here in America wise up and can recapture the market. There are many people that rely on their success to make a living. Heck, Ford's loss is probably what they pay the CEO!

So Cal Mark · Post by **So Cal Mark** » Fri Jan 26, 2007 10:19 am

the inflated salaries and bonuses are part of the problem for US corporations, Fords' loss is the equivalent of giving away a Mustang per minute. It wasn't too long ago that Fiat was in the same boat though

mbouse · Post by **mbouse** » Fri Jan 26, 2007 4:18 pm

the world has gone too global, Denise. there is no going back to the era when the big three were the only game in town.

our shop feeds honda shops in missori for nearly 70% of our business. another 10% goes to detroit for various tier one guys, including the Mustang.

i'm glad that Fiat did well. next year it will be someone else's turn. wonder when it will be mine?

spidernut · Post by **spidernut** » Sun Jan 28, 2007 4:02 am

Ford's problems are many. They build cars that are lackluster (apart from the overpriced Mustang) and have substandard quality. Ford cars earned the dubious title last year as being "most likely to be a lemon." I was a devoted Ford fan for years. After several of my family members and I bought some Fords of various makes and models and we had nothing but mechanical problems with them all, we all swore off Fords. My '79 Fiat has had less mechanical problems than did my last Ford. That's really sad.

GM's problem is the massive pensions they had agreed to pay out. I'm not saying that the people don't deserve them, it is just that the cost to GM is massive. And, of course, they have some major quality control and longevity issues as well.

The U.S. automakers have a long way to go. They seem to cling to the short-term profit strategy. As a result, I feel they're lost most brand-loyalty.

So Cal Mark · Post by **So Cal Mark** » Sun Jan 28, 2007 12:23 pm

I think GM has the same reliability issues that Ford has, and they've suffered from very short-term thinking. Even while the marketplace was shifting from massive SUVs, they planned a future around behemoths. With the backing from this administration to disregard fuel mileage gains, tax breaks for huge vehicles and degradation of pensions, they still compete mostly with themselves for customers. When they made the decision decades ago to make the separate divisions all fall under the corporate roof, they pitted the various division against each other. Originally, the brands each had their own targets, but they all started producing the same cars, with the only differences being grilles basically. It didn't matter if you bought a Buick, Chev, Olds or Pontiac, they were all just rebadged versions of the same car.

mdrburchette · Post by **mdrburchette** » Sun Jan 28, 2007 2:45 pm

Agree with you on that, Mark. GM also outpriced themselves on these SUVs and other models. I remember being appalled at the $50k price tag on luxury Denalis and Suburbans and wondered who in their right mind would pay such a price. Then, the end of the Bonneville came when they raised the price to $35k so anyone in the market for a decent family car had to go elsewhere for an affordable vehicle.
But it's not only on the sales end people are fed up with. The vehicles are designed in such a fashion that it's too expensive to have them repaired, then there's not enough corporate policing of the franchises to keep them from robbing the customers blind in the service department.
Having worked in the car business 20 years, I've seen the decline and it makes me sad.

So Cal Mark · Post by **So Cal Mark** » Sun Jan 28, 2007 3:34 pm

it does go back to reliability and cost of repair. Customers are very frustrated when they find their vehicle failed out of warranty due to poor design. The factory issues bulletins and updated parts, but all at the customers' expense. Fuel pumps that cost $600, fuel injection systems that cost $600, transmissions that cost $3000 and all fail every few years.

spidernut · Post by **spidernut** » Mon Jan 29, 2007 5:18 am

You're so correct about that. Cars don't nickel and dime you anymore...they $600 dollar you death every visit until you're poor.

Part of the problem is also in pricing strategies of individual dealerships, not just the manufacturers. I helped my brother when he was trying to buy a new Chevy Tahoe.

The dealership near his home had the specific make and model he wanted priced at $47,000. He chiseled them down to $41,000 after hours of wrangling. I priced around for him and located an exactly equipped Tahoe in the mid $30K range. It took me one phone call to find a dealer with 24 of them. He was willing to sell them at his actual cost (not at invoice, but invoice minus factory holdback, minus factory incentives, etc.). Think about it - that's about a $12,000 markup they had on the vehicle.

The same dealer told me that he also had about a dozen of the last year's model still on his lot (new) for sale. Chevy had no incentives for the dealerships and no customer rebates. Chevy's answer to him was "you should have sold them before the new models came out."

That dealership went bankrupt last year after decades in business. They were driven out by poor sales.

reservoirdog · Post by **reservoirdog** » Mon Jan 29, 2007 7:08 pm

After I read Michaels comments I checked out Auto Serra (linked to his profile), nice day for a ride and I was hopeful to find a good mechanic near me in Vahalla NY.

Naturally, my 82 Fiat promptly overheated at the shop, and my wife had to pick me up in my leased Jeep to get me home, again. At least the Jeep didn't overheat, but I'm only keeping it for 3 years. Not a lifetime commitment like the Fiat