Industry News

No Sale: Fiat Exec Quashes CNH Sales Reports

April 23, 2009

With Fiat in negotiations over an alliance with struggling U.S. carmaker Chrysler Corp., several recently published reports have suggested that Fiat might need to sell some of its assets to generate the cash needed to execute the deal. Specifically, several reports have indicated that Fiat’s most likely option would be to deal CNH Global NV, its wholly owned ag and construction equipment manufacturer and its Iveco truck business.

Those two businesses are said to account for nearly two-thirds of Fiat’s operating income and analysts have speculated that the sale of both could generate in excess of $15 billion.

But during a conference call with investors to announce its first quarter results, Fiat Chief Executive Sergio Marchionne, was blunt in his rejection of that idea, saying that selling such high-value assets “for the car side is really trying to put the donkey ass-backwards because the problematic business here is the car side.

“The real issues are worrying about this business five years out,” added Marchionne, who at one point ran the CNH operations. “If we can be a conduit for change, we need to do this, but it cannot become at the cost of disposing of what I consider to be incredible, valuable assets of this group in which we have devoted time and resources - not only in terms of financial resources, but we've devoted a huge amount of management time to try to bring them to this performance we're now seeing.

“I don't think in my view that you will ever see a condition where Fiat will dispose of one of what you would call its prized assets to finance a recovery of car. The solution is elsewhere. The solution is the way I have outlined before – where I think reasonable people need to come together and effectively find a way to collaborate in these consolidations and bring about the desired result.

"But there's absolutely no reason - I don't even know how to justify morally if I had to – why Fiat as a player in this business would have to sacrifice what it has worked very hard to build in order to accomplish an objective the benefits of which would be shared across the industry.

“I think the obligation is in all of us - Fiat included - not to do stupid things.”