Fiat SpA unveils its first strategic plan this week since teaming up with U.S. carmaker Chrysler and CEO Sergio Marchionne could outline a timeframe two years ahead for selling stakes in a combined company. Marchionne, something of a guru for the flailing car industry after predicting over a year ago there would be drastic consolidation, needs to lay out plans for new products to show he can achieve synergies and cost cuts with Chrysler.
Unveiling the plan -- which will include presentations from all of the company's business units -- will take over six hours and involve battalions of journalists and analysts descending on the 1920s Lingotto plant which is now Fiat's Turin headquarters.
In an abbreviated version of an exhaustive, day-long Chrysler presentation in November 2009, each unit will present product plans and business targets and a focus on strategy to win market share, as rivals bulk up and demand splutters.
Marchionne's got to say something -- either we keep the autos or we do something. We can't just go on like this, from an investor standpoint but also from the standpoint of the employees, said analyst Philippe Houchois at UBS.
Marchionne has told everyone who's asked about a possible separation of the autos business to wait for the strategic plan.
He has said he expects to meet criteria laid out by the Obama administration for raising his stake in Chrysler to 35 percent in two years.
Once he has that, he could put Chrysler and Fiat together and offer investors a slice of the enlarged pie -- assuming the autos industry recovers pre-crisis confidence. He has said the car market should be back to normal in 2013.
Marchionne has largely dismissed the idea of any other tie-up for Fiat. But he did say earlier this month that France's Peugeot, once in talks with Fiat, would be next to find a partner.
Auto specialists say such a merger could work but wouldn't make it past politicians keen to save jobs.
The merger that would make the most sense is also the one that would be the least palatable to political circles, said Michael Tyndall, autos specialist at Nomura.
There's considerable overlap between the two carmakers and that's great news in terms of economies of scale. It's very bad news in terms of job cuts, he added. In addition, Peugeot's controlling family shows no signs of wanting to sell.
For Fiat's own future, Marchionne will need to show he has a strong line-up of new cars to tempt a financially squeezed public which lacks the tax incentives that supported demand last year.
Car sales are expected to slump worldwide as governments remove car scrappage tax breaks. Forecasts suggest Italy's car sales for instance could fall over 20 percent this year without the incentives. Marchionne has said Fiat should see flat profit in 2010.
Fiat also reports first-quarter results on Wednesday.
Teaming up with Chrysler could give Fiat a lifeline to remain a contender in the larger, more expensive C and D cars -- where its Alfa Romeo and Lancia brands have small market shares.
Through Chrysler, Fiat is potentially getting the means to stay in the segments above B. Hopefully there will be a product plan that will show activity in those upper segments, Houchois said. On a standalone basis the writing on the wall was just that Fiat would ... disappear from those segments, he added.
Fiat launches its latest Alfa Romeo model, the Giulietta, in May and is hoping it will propel the sporty marque's sales, together with the MiTo, to 120,000 this year -- up 10,000 units.
The target for Alfa Romeo is likely to be set at 200,000 from 2011 to prove the 100-year-old brand has turned around under new head Harald Wester.
The fate of Fiat's Lancia marque is closely tied to the Chrysler range, with the two already under one head, Olivier Francois. It's likely models will be sold under the Lancia badge in southern Europe, especially Italy, while Chrysler will be the marque for the United States and parts of northern Europe.
Fiat has already outlined key new products for this year and next at a presentation to unions on December 22, with five based on Chrysler models and five other new products. (www.fiatgroup.com)
Other areas that could come under the spotlight include Fiat's plans for fast-growing emerging markets such as China, India and Russia. It has joint ventures in all three.
And there is the possibility that the presentation could hint at partners for its Iveco truck unit, analysts said.
Marchionne said a year ago Iveco could get involved in mergers and acquisitions.
(Additional reporting by Soyoung Kim in Detroit; Editing by David Holmes)