* Fiat CEO Marchionne presents 5-year Chrysler plan
* Forecasts break-even on net basis by 2011
* Plan hinges on cost savings, more than doubling sales
(Recasts, adds CEO comments, analyst comment, other details)
By Jo Winterbottom and Soyoung Kim
DETROIT, Nov 4 (Reuters) - Chrysler's new boss offered an
ambitious outlook for the automaker on Wednesday, saying it
would more than double sales, roll out a dozen new models built
on Fiat platforms and pay back debt to U.S. taxpayers over the
next five years.
Fiat Chief Executive Sergio Marchionne said Chrysler would
break even on an operating basis in 2010 and on a net basis by
2011. He said the automaker had built up its cash since it
emerged from a fast-track bankruptcy funded by the Obama
administration in June.
The financial projections were the first Chrysler has
offered since Marchionne took management control of the U.S.
automaker and addressed concern about the financial toll of
Chrysler's continued slide in U.S. sales.
But Fiat's turnaround plan hinges on a range of upbeat
assumptions: Chrysler will have to recover market share lost as
it slid toward bankruptcy, the U.S. market needs to stage a
gradual recovery and Fiat will need to find new overseas
markets for Chrysler models led by its Jeep brand.
Marchionne said the plan would push the limits of what
Chrysler's engineers and dealers could deliver but said his
experience spearheading Fiat's own turnaround five years ago
showed it could be done.
"Some of you are going to walk out of here skeptical, and
some of you are going to be downright incredulous," said
Marchionne, who was joined on stage by Chrysler's 24 top
managers. "We have been here before."
Marchionne unveiled a long-awaited turnaround plan at
Chrysler's headquarters that ran for over eight hours and
included references to topics ranging from Machiavelli to
singer Bobby McFerrin to Fiat's engine technology.
He said many analysts had misjudged how much Chrysler had
been able to reduce its costs
"Most of you underestimated the substantial reduction in
fixed costs that was carried out by the old Chrysler. The new
Chrysler is being incredibly parsimonious."
But the presentation did little to allay skeptics who say
Chrysler could be short on time to steer its faltering
operations toward recovery and rebuild interest among American
consumers.
In October, the most recent month for which there is
industry data, Chrysler's U.S. sales fell 30 percent even as
General Motors Co [GM.UL] reported its first monthly sales
increase in nearly two years.
For the year to date, Chrysler's U.S. sales are down almost
39 percent and it has had to rely on far more aggressive
discounts than rivals to sell cars and trucks.
Marchionne also steered clear of a key question for
Chrysler's workers: he did not say where it will build the new
models now on the drawing board, including vehicles intended to
make it competitive in the mid-sized and compact car segments
where it now lags rivals.
"We know our shortcomings. We've been honest and frank,"
Marchionne told an audience of several hundred analysts,
reporters, dealers and civic leaders. "Now we just need to go
out and fix it."
'INEXTRICABLY INTERTWINED'
Marchionne said Fiat and Chrysler's businesses were now
"inextricably intertwined" and would provide the U.S. automaker
access to fuel-saving technology and engine technology it could
not have developed on its own.
Fiat was given a 20-percent stake in Chrysler in exchange
for revamping Chrysler's investment-starved vehicle line-up, so
the presentation by Marchionne represented the first detailing
of what Fiat was putting into the automaker in exchange.
By 2014, he said half of Chrysler's cars would be built on
platforms developed by Fiat and 40 percent would have engines
supplied by the Italian automaker.
Chrysler also projected that it could save some $2.9
billion over the next five years by sharing parts purchased
with Fiat.
Taking aim at a persistent weakness in Chrysler's
operations, the new management team under Marchionne said they
expected sales outside North America could account for 18
percent of overall sales volumes by 2014. That would be up from
a recent low of 8 percent in 2006.
"It's an ambitious plan," said Erich Merkle, an auto
industry analyst with Autoconomy.com.
"On the other hand, they don't have an alternative."
Many top U.S. auto executives have been watching closely to
see Fiat's plans for Chrysler. Several executives interviewed
at the Reuters Autos Summit in Detroit this week said they had
been impressed by Marchionne's actions so far.
"Chrysler has the most difficult challenge on every count
and it's going to take all of Sergio's wonderful talents to
meet that challenge," Mike Jackson, CEO of No. 1 U.S. auto
dealer AutoNation Inc, said ahead of the presentation.
Chrysler has had past brushes with financial crisis --
including a federal bailout 30 years ago -- but the crushing
decline in U.S. auto sales this year pushed it to the brink of
liquidation.
Chrysler's larger rival, General Motors Co, went through
its own government-sponsored bankruptcy, but GM has been far
more open about its plans and financial assumptions.
Marchionne said it had taken five months for his team to
develop the plan for Chrysler, adding that the company's
silence over that time had cost it sales.
"We paid the price," he said.
(Writing by Kevin Krolicki, Scott Malone and James Kelleher;
Editing by Matthew Lewis, Steve Orlofsky, Andre Grenon and
Carol Bishopric)
