UPDATE 1-Marchionne to update Fiat-Chrysler plan due to Europe woes
By Bernie Woodall
COLUMBUS, Ohio Oct 8 (Reuters) - Sergio Marchionne, chief executive of both Fiat SpA and Chrysler Group LLC, will revise 2-year growth plans for both automakers later this month to reflect the slump in European auto sales since 2009.
European car sales fell 8.5 percent in August for an 11th straight monthly decline and several auto executives said last month that a European rebound was unlikely within two years.
That raised questions about Fiat's ability to meet targets laid out in its five-year growth plan that was announced in 2010. Marchionne outlined a separate five-year plan for Chrysler in late 2009.
Marchionne, who has led both automakers for more than three years, will outline his new 2013-2014 forecast for Fiat-Chrysler on Oct 30, he told reporters on Monday in Columbus, Ohio.
"You will see an update of what we think will happen in 2013 and 2014," he said, before delivering a speech on creative advertising. "To assume that the 2010 data that was put out in Europe is going to be confirmed is nonsense."
Chrysler exited government-funded bankruptcy protection in 2009 under the management control of Italian automaker Fiat, which was also given a 20 percent stake in the U.S. automaker.
Since its bankruptcy, Chrysler has become Fiat's main source of strength as auto demand in Europe contracts. The combined Fiat-Chrysler group now makes more than two-thirds of its profits in the United States.
"How the group overall compensates for that shortfall is another issue because we've got other businesses and other operations that have come a long way," Marchionne said Monday at the event held at the Wexner Center for the Arts at Ohio State University.
VEBA, FIAT AT ODDS OVER CHRYSLER VALUE
Marchionne said he hoped to resolve quickly the dispute between Fiat and Chrysler's other shareholder, the retiree healthcare trust affiliated with the United Auto Workers union, over the value of Chrysler.
"I would certainly hope that it would happen by the end of the year," Marchionne told reporters on Monday.
Since 2009, Fiat has boosted its stake in Chrysler from 20 percent to 58.5 percent after meeting a series of performance targets set by the U.S. Treasury during the recession.
Fiat would like to increase its stake in Chrysler by buying shares now owned by the trust, known as the voluntary employees beneficiary association or VEBA. Fiat is seeking to exercise a call option to boost its stake in Chrysler by 3.3 percent.
But Fiat and the VEBA are now at odds over what those shares are worth. The trust is looking to maximize the value of its Chrysler stake to cover escalating healthcare costs for the U.S. automaker's retirees.
Marchionne said Fiat will "show up" to exercise its call option every six months, as allowed by the 2009 bankruptcy documents. He will attempt to buy another small stake in Chrysler from the VEBA in January.
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