A funny t-shirt slogan reads “aim low, achieve your targets, avoid disappointment”. But it would probably be best if you didn’t give it as a Christmas present to Fiat CEO Sergio Marchionne.
The reason is that the Italian group has lowered its 2012 sales forecast of 2.7 million units by a substantial amount; the new target for next year is 2.2 million, 500,000 units short of the original estimate presented in the group’s 5-year plan.
The good news is that its partner, Chrysler, is expected to hit its 2.4-million sales target. Adding up the numbers brings the Fiat-Chrysler combined sales projection for 2012 to 4.6 million units.
The bad news is that Marchionne has already set a target of 5.9 million sales for 2014. You don’t need a bachelor in economics to figure out that the two companies will, if their projections are correct, still need to increase their annual sales by 1.3 million units. And they have only two years to achieve their goal.
“Marchionne’s 2014 volume target looks truly challenging, unless Fiat’s core markets show a substantial rebound in the coming years, which looks unlikely now”, Mediobanca’s financial analyst Massimo Vecchio, told Autonews.
In fact, Fiat’s CEO had himself predicted in August that 2012 is going to be a bad year for the European automotive market. His prediction is confirmed by leading analysts who expect next year’s European car sales to decrease between 2 and 6.5 percent compared to 2011, due to the financial crisis that is storming the Eurozone.
So why has Marchionne set such a high target? Richard Hilgert, an automotive analyst in Chicago’s Morningstar, offers a possible explanation.
“Despite the probable downturn in Western European 2012 new vehicle demand, especially in Italy, I think the company is expecting to benefit from the market onslaught it plans to unleash over the next three years with 35 new or significantly redesigned models, the bulk of which should come in 2013”, he said.
At least Marchionne won’t have to worry about its workers’ union causing any trouble, since theyrecently agreed on a new contract that ended their conflict. Just bear in mind that it expires at the end of 2012…
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