Fiat Industrial, a division of Fiat specializing in trucks and construction/agricultural equipment has announced a change in management structure to help the transition of acquiring a new subsidiary, CNH Global (agricultural equipment maker).
The new structure will emphasize brands and brand awareness, in addition to region by region operations. The adoption strategy will be similar to when Fiat acquired the American car company Chrysler in 2011.
While negotiations of the acquisition are still in progress, Fiat Chairman Sergio Marchionne is confident they will succeed, however expensive it may be. While this may briefly take a toll on the company’s overall revenue and income, its assets will increase with the purchase of a new division. Since CNH Global is a company with nearly $20 Billion in revenue yearly and business in over 150 countries, the deal should turn out to benefit Fiat in the end.
In addition to acquiring CNH Global to bolster Fiat Industrial, Marchionne has announced that Alfredo Altavilla will take over operations in an attempt to turn around Chrysler Group LLC, the failing American car company that is 58.5% owned by Fiat. in addition to American sales, Fiat announced it will be focusing on returning Chrysler’s market presence in Europe, the Middle East and Africa as well.
In the next two years, due to the aforementioned acquisitions and the attempted turnaround of Chrysler, Fiat expects to lose money. As a result they are turning to innovation to differentiate themselves. They plan to introduce 19 new models in the next four years including a Jeep compact car. Also, they are making efficiency a priority in their Italian factories they feel are under performing. By renovating and innovating they are attempting to stop the tide of losing money Chrysler faced due to the American economic crisis of recent years. Making a Jeep compact and over half a dozen new Alfa Romeos and Maseratis is going to push Fiat’s products into new market segments that will bring them more customers and greater revenue. Maximizing efficiency of existing processes, in addition to reducing costs and raising output, may have the added benefit of improved products, which could help them to retain customers better.
Additionally, visionary leader Marchionne has approached leaders of American car company General Motors and French car company Peugeot with an idea of combining forces to take over Volkswagen’s dominance of the European automobile market. However, it is unclear if such a deal would ever take place, especially considering that both GM and Peugeot have taken bailout money from their respective governments in recent years, weakening their financial position.