Asia success still long shot for ambitious Fiat Chrysler

Thu May 8, 2014 2:07pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article | Single Page
[-] Text [+]

By Agnieszka Flak

DETROIT (Reuters) - If Fiat Chrysler Automobiles FIA.MI wants to become a significant force in Asia, it needs to succeed in China. But its track record so far in the world's largest automobile market raises doubts about its ability to deliver on growth promises, analysts say.

The newly merged auto company has been present in China for some time, but it has a market share of only 0.6 percent both in that country and in the Asia-Pacific region. It lags far behind rivals that are truly global players, including Toyota Motor Corp (7203.T: Quote), Volkswagen AG (VOWG_p.DE: Quote), General Motors Co (GM.N: Quote) and Ford Motor Co (F.N: Quote).

Building muscle in China by producing Jeeps and more Fiats locally is a pillar of a new turnaround plan unveiled by Chief Executive Sergio Marchionne earlier this week as he pushes to boost global sales by as much as 60 percent to 7 million cars by 2018.

The strategy was widely criticized by analysts as overly ambitious, causing Fiat Chrysler shares to fall sharply on Wednesday.

"Not being present in Asia means being outside half of the global car market," said Andrea Giuricin, a transport analyst at Bicocca University in Milan, Italy. "That's a very big problem for Fiat."

Fiat Chrysler has been over-reliant on three car markets: the United States, Italy and Brazil. Marchionne acknowledges the world's seventh-largest auto group needs to catch up rapidly in Asia in order to compete in a cutthroat industry that has been hurt by Europe's still-soft demand. In addition, demand is now flagging in some of the automaker's key emerging markets including Brazil.

Fiat Chrysler sold 130,000 cars in China last year, compared with just over 3 million vehicles each for Volkswagen and GM.

It wants to sell 850,000 vehicles in China by 2018 and raise its market share their nearly fivefold to 2.8 percent - targets analysts call a stretch given the intense competition and the company's problems in getting a grip on Asia so far.   Continued...

 
The Fiat logo is seen on a Fiat vehicle displayed outside Chrysler World Headquarters during the FCA Investors Day in Auburn Hills, Michigan May 6, 2014. REUTERS/Rebecca Cook