Honda website
Honda website

FEBRUARY 1, 2006

Fiat makes some money (well, sort of)

Although FIAT no longer helps Ferrari financially, according to chairman Luca di Montezemolo, there will be some relief in Ferrari circles with the news that FIAT is finally making money again after five years of losses. The company reported a full year profit of $1.5bn although one has to be careful as the numbers have been boosted by a $1.8bn payment from General Motors to end their failed alliance with the Italian car maker. In addition to that FIAT had one-time gains from the sale of its shares in Italenergia Bis ($1bn) and another $845m from the sales of new shares. The company has reduced its debt to $3.8bn from a collosal $11.4bn.

The car unit is improving its numbers thanks to the new Grande Punto is selling well but the company has lost market share in Europe once again with the share dropping from 7.4% to 6.5%. The company hopes that sales of its new models will push up itgs market share in Italy this year to 30% and is pushing to sell more cars in Germany, France and Spain and the UK. The big question is how the cars will fare after Peugeot and Opel launch new cars in the same market segment and some industry analysts have sounded cautious notes about whether the performance of the company is sustainable in the longer-term. Fiat has plans to invest $12bn in 20 new models in the next three years but the investment company Sanford C Bernstein said that "we expect Fiat's much-vaunted turnaround to be short-lived".

It may therefore still be some time before FIAT can start putting more money into Ferrari again.