“Turkey’s role in our growth plans is increasing”

Sergio Marchionne is the CEO of Fiat, the Italian automobile giant… The world knows him as “the man who saved Fiat”. The reason is that he took the company into profit from losses of 1.9 billion Euro. Marchionne predicts that they will triple their profits by 2010 and that Tofaş will make an important contribution to this growth. Marchionne says: “Between 2007 and 2010 Turkey’s role in profitability will increase still further. Tofaş has played a singificant role in the international success that we have achieved as Fiat.”

It was 2004 when Sergio Marchionne took over as group CEO of Fiat, the Italian automotive giant. Fiat was undergoing a turbulent time, both financially and in terms of its management. The company was continually posting a loss and had changed CEO four times in two years. When Marchionne was appointed, he was  the fifth CEO in two years.

But under Sergio Marchionne Fiat began to recover. Once he became the new CEO, Marchionne put at end to Fiat’s old hierarchical order. He replaced it with a corporate culture in which people would want to work voluntarily. On top of all of this, he delegated authority to talented young people. In addition to the high level management, he also changed the company’s branding strategy. After posting losses for six years in a row, in 2006 the company made a profit of 1.9 billion Euro. The Fiat Group’s turnover was 51.8 billion Euro and its net profits reached 1.9 billion Euro.

Now that it had the cycle of boom and bust behind, Fiat now began to focus on growth. The Fiat Group is already making plans for 2010 and has set itself targets of turnover of 67 billion Euro and commercial profit of 5 billion Euro. The Fiat Linea and Minicargo, the new Fiat Bravo and new Fiat 500 models that will be produced by Tofaş are expected to make a major contribution to the realization of these figures.

Marchionne came to Turkey for the global launch of the Fiat Linea. During the time he was in Turkey he spoke only with Capital. He answered our questions about the changes he introduced at Fiat and his plans for the future.

* You are now a profitable company… What are your profitability and growth strategies?
I want a profit of 5 billion by 2010 Euro. When I came to the company it was making a loss of more than 1 billion Euro. Now we are targeting 5 billion Euro. Our strategy is very simple: to sell more and earn more money. We are active in a broad field in the automotive sector. We produce for various segments, from tractors to trucks and passenger cars. Our target is to turn in the best performance against our rivals in every segment.

We have a long way to go to achieve our targets. But we are happy with the position we are in. Our results over the first quarter of the year encourage us that we shall reach our targets. It appears that we are getting a return on what we have done.

* What will Fiat focus on in the future? Which will be Fiat’s most profitable models and segments?
Fiat will launch 23 new vehicles on the market before the end of 2010. We hope to raise our car sales from 2 million last year to 2.8 million this year and the share of Fiat automobiles from 9 percent to 11 percent. These figures do not include the Lancia and other models which are manufactured by Fiat. And as the Fiat Group we want to triple our profits by 2010.

We need to be one of the three largest manufacturers in Europe. In January 2007 we launched the Bravo. The Bravo is a sporty model with lines like the muscular head of a bull. On 4 July this year we shall relaunch the Fiat 500. This is important as this launch will mark 50 year since the launch of the original model.

* What is the geographical distribution of Fiat’s sales? What will be the distribution in 2010?
We foresee group revenue of 70 billion Euro by 2010. In addition, we are planning commercial profits of 5 billion Euro.

* It has been said that one of the main reasons Toyota has been able to wrest the leadership away from General Motors is its fuel-saving vehicles. Which features will be determine the direction of competition in the future?
Toyota created some vehicles to fill a gap in the competition. Now we need to look at Toyota and learn from what they did.

As Fiat, over the next four years we shall really make our presence felt in the market. As a result, we should close the gap between us in the shortest possible time and in the quickest possible manner. If the ways of doing business don’t change, I don’t see anything to stop European companies achieving the same margins as Japanese firms.

The Old Management Was Focusing On The Competition, We Are Focusing On Being First

* What has been your performance over the last two years in the luxury automobile segment? Could you talk in particular about the performance and market shares of Alfa Romeo, Ferrari and Maserati?
In terms of the quality, marketing and customer relations of the Alfa Romeo brand, the former management was focusing on its closest rival on the market. Two thousand Alfa Romeo customers called the company the year before last and none of them received a reply. I ensured that all of the customers received a call and an apology. My only concern is how to be number one. When we adopted this attitude with Alfa Romeo our sales in the world as a whole reached 17 percent in 2006. Maserati is developing in financial terms. The brand has reduced its losses from $230 million in 2004 to $116 million in 2005 and $45 million in 206. At the moment we are targeting a signficant rise in global Maserati sales. We shall double our sales to 12,000 by 2011. Last year our sales were around 5,500. When we compare them with last year, we see that sales of Ferrari rose by 12.3 percent. In 2006 Ferrari sales stood at 5,560.

Nilüfer Gözütok
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