TURIN, Italy (AP) — Fiat's alliance with U.S. carmaker Chrysler should allow its European business to reach break even by 2014, CEO Sergio Marchionne told shareholders on Wednesday
The two car makers, which entered an alliance nearly three years ago, expect to sell between 4.1 million and 4.4 million vehicles this year, up from just over 4 million in 2011.
The forecast takes into account the declining European market, which Marchionne says is expected to contract for the fifth consecutive year to around 13 million.
Trends were clear in sales figures for the month of March announced this week. Chrysler Group sales jumped 35 percent to the best month in four years. Fiat domestic deliveries, on the other hand, dropped to the lowest level in 32 years as Italians face recession, higher taxes and rising gas prices. Fiat domestic and European deliveries also were interrupted by a monthlong tractor-trailer strike.
Marchionne aims to make cars in Italy for export to North America, where factories are running near full capacity compared with 50 percent in Italy. Toward that end, Fiat reached a deal at the end of last year for more flexible work rules at all its Italian factories.
"This process will allow us to cleanup definitively the inefficiencies in out industrial network and return to break even with the European car business by 2014," Marchionne said.
Fiat SpA reported strong earnings last year thanks to Chrysler's turnaround, but lost money in its home market, Europe.
Marchionne also told shareholders Fiat was continuing to look for a new partner in Asia, and that the first Russian cars in a joint venture would be produced next year.
Fiat and Chrysler's combined 2011 sales made it the seventh-largest car company in the world. Marchionne aims to be capable of building 6 million cars a year by 2014 — the figure he says is necessary to be competitive in the global market.
"We are no longer a marginal player," Marchionne told shareholders. "We have become one of the strongest and most competitive car producers, with a level of technology among the most innovative and advanced in the world."
Marchionne said the two companies had achieved synergies of €1.4 billion ($1.9 billion) in the last two years — a billion of which was reached last year alone. The CEO said the integration process will be half completed by the end of this year.
Fiat — which has a 58.5 percent stake in Chrysler — maintained its 2012 targets of €77 billion ($102 billion) in revenue and net profit of €1.2 billion to €1.5 billion ($1.6 billion to $2 billion).
Fiat could raise its stake in Chrysler another 3.3 percent this year, Marchionne said. Fiat has the option to raise its stake by 3.3 percent every six months beginning July 1 by buying up shares owned by the auto worker union's pension health care fund, which currently controls the remaining 41.5 percent.