Is Fiat looking to leave the car business? You might come to that conclusion if you read this from Fox News today. Any ideas, anyone?

Friday, November 20, 2009
Fiat Cut To Neutral From Buy At UBS


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By Barbara Kollmeyer
Marke****ch Pulse MADRID -- Italian automaker Fiat was cut to neutral from buy on Friday at UBS, which said it sees lower equity value for Chrysler. UBS said it continues to see value in Fiat as an agent of transformational change and not owning it is akin to a "risky bet against structural change in European autos." UBS said it has cautious views on auto demand in Europe and Brazil, as well as slow recoveries in trucks and machinery. A European scale deal remains a requirement for Fiat to spin off its auto business, with PSA Peugeot Citroen a likely candidate, said UBS. Near term, UBS views 10 euros per share as fair for the consolidated operations but its value of Chrysler to Fiat has been cut to 1 euro from 2 euros previously.


Copyright © 2009 Marke****ch, Inc.

I dont give a monkeys chuff what financial analysts & forecasters say these days TBH.

I seriously doubt Fiat are going to leave the car manufacturing business or go bust, all car manufacturers are in the same boat which gets periodically rocked by Stock Market speculators hoping to make big bucks...

UBS? who themselves have needed gawd knows how many billions to bail them out of the hole they have dug? yep, a very reliable source.....

Can't see it, somehow. FIAT are well capable of diversifying enough to run the car side of the operation at a loss for the forseable future. And are FIAT not nearly unique in actually making money?

I want to know what word is being starred out

Copyright © 2009 Marke****ch

Captain Mike said:

I want to know what word is being starred out

Copyright © 2009 Marke****ch

Click to expand...

Market Watch, no spaces. Last letter of the first word, first 3 of the last.

5abr3 said:

Market Watch, no spaces. Last letter of the first word, first 3 of the last.

Click to expand...

Talk of off-loading the car making division has been going on since Agnelli died. The question is when is the best time to sell any auto maker. When its a loss making liabilty or when its in profit, has potential and prospects and is an attractive proposition? If they do hive it off the brand wont change, they will still say Fiat on the back......Jags and LRs havent suddenly appeared with Tata badges on them.

Remember all this????

http://ceoworld.biz/ceo/2008/12/08/fiat-ceo-sergio-marchionne-says-needs-partner/

...and this???

http://www.reuters.com/article/reutersEdge/idUSTRE50R2SO20090128

Now that the GM/Vauxhall deal has fallen on its ar** this might be plan B. The Chrysler deal is not the answer to all their problems but has increased the viability of the business and selling off the auto-division would clear their debts and put cash in the pocket of the group that they could use to fund investment in the more profitable divisions of their empire.

Aye and im going to quit my IT career and sell handbags and beauty products

Fiat has some joint ventures in China, and that seems to be more likely for furure integrstion, once they get Chrysler onto Fiat platforms you can see how that would work. The big 2 in the USA are non starters so PSA are suggested faute de mieuax. I cant see Fiat getting into bed with a company run by the French, there is only one way the French govt would see that ending, and it doesnt include cars being built in Turin.

there is no way in hell Fiat are going to leave the car business, yes there shares have taken a knock, i know this from bitter personal experience, they were worth nearly €11 each a month ago, think they're about €10-ish at the moment, but car making is in Fiat's blood, its not going to move away from it!

An additional point is Italian politics. We know for many years, contrary to EU regs. the French government have supported French car manufacturers. Cars are a major and most important industry to the French economy.

Fiat, for Italians/Italy is an even bigger treasure. I don't think they are in any way supported by the Italian government to the same extent as is the French car industry, but the Italians themselves, as a culture, treasure their automotive history.

Unlike many other countries I can think of (e.g. UK) they have sold very very few of their car, motorbike, truck, tractor etc. industries outright to other countries.

The are some collaboration / shared ownerships, e.g. Fiat Hitachi (earth movers), Fiat Holland (tractors) and Fiat/Iveco/Ford small trucks, but no outright sale or capitulation from the core markets.

At the end of the day FIAT = Fabbrica Italiana Automobili Torino. While that's not stopped them making other stuff, it's difficult to see them pulling out of car manufacture.

I think I'm right in saying that Fiat makes more money from it's other industrial business interests. The Fiat Automotive segement not only includes the cars but also Magnetti Marelli, Lubrificante, ...... the list goes on and on.

Just take a look at http://www.fiatgroup.com

Pretty impressive

and I've just checked Automobiles account for 49.2% of the group income.

49% of the groups income but how much as a percentage of the groups profit? The fact is they have a 2.6% margin, you would get more by investing the working capital in the bank! They are 500m Euro down on profit from this time last year and the group has a net debt of 5.8b Euro, NOT a good position to be in..... People see the UK market share has increased by a few percent and assume Fiat are booming and raking it in!! Truth is they are in the same boat as everyone else and sinking fast. These are not sustainable figures and before long the creditors will want there cash back while its still there to get or Fiat really will disapear.

The figures......

http://www.fiatgroup.com/en-us/shai.../Fiat_Group_Press_Release_Q3_2009_Results.pdf

I read a few years back that even if Fiat stopped all motor manufacture in Turin it would make only a very small dent in the Torinese economy, so diverse is it.

We tend to think: Turin = Fiat. It ain't so.

sledge said:

49% of the groups income but how much as a percentage of the groups profit? The fact is they have a 2.6% margin, you would get more by investing the working capital in the bank! They are 500m Euro down on profit from this time last year and the group has a net debt of 5.8b Euro, NOT a good position to be in..... People see the UK market share has increased by a few percent and assume Fiat are booming and raking it in!! Truth is they are in the same boat as everyone else and sinking fast. These are not sustainable figures and before long the creditors will want there cash back while its still there to get or Fiat really will disapear.

The figures......

http://www.fiatgroup.com/en-us/shai.../Fiat_Group_Press_Release_Q3_2009_Results.pdf

Click to expand...

I'm not a business finance or accountant but the figures looked fairly healthy.

Operating margin is low, for sure, but that is after financing their 5.8b debt. More importanly is their liquidity, i.e. 8.5b, up 2b on previous quarter. They could easily pay off that 5.8b debt but choose not to. The debt will give them tax advantages, and with money in the bank they have room to manoever, invest etc. without increasing the debt.

Of course ....... I also know that most company accounts are all smoke and mirrors and we know exactly where that got the banks

Healthy?? Yeah, the Q3 report shows plenty of big numbers but it may have escaped your notice that the majority of them have a minus sign in front . They are keeping their heads above water but its at the expense of drastic cutbacks in production and overheads.

Liquidity is dead money, not an indicator of performance, its whats in the current account not the saving account. Its cash in hand earmarked to cover the day to day running costs of the business, like wages, suppliers, factory costs etc. Look at it as money owed. That figure of 8.5b tells me its close to what it costs per quarter to run the business. The fact it has increased when turnover and profit has decreased is not good!

If they wanted to suddenly draw 5b out of liquid funds to pay their debt off they would have to reduce quarterly operating costs by the same amount or they wouldnt be able to pay their bills.......its impossible!

Remember this?
http://in.reuters.com/article/consumerproducts-SP/idIN181990+03-Mar-2009+RTRS20090303
Lack of liquidity is what almost took Vauxhall/Opel under, they simply ran out of cash.