Fiat may sell Ferrari stake ahead of Chrysler merger, Marchionne tells analysts

Fiat S.p.A. may sell auto-parts division Magneti Marelli S.p.A. and a stake in supercar maker Ferrari S.p.A. before consolidating Chrysler Group LLC, CEO Sergio Marchionne told analysts. 

“We left Turin with the clear message that Fiat and Chrysler will become one company,” Morgan Stanley analyst Stuart Pearson wrote in a note to clients Monday, after attending a Nov. 12 analysts meeting with Marchionne. “A Ferrari initial public offering and potential Marelli disposal may need to come first, according to management,” said Pearson, who has an “overweight” rating on the stock. Morgan Stanley added Fiat to its “best ideas” list Monday. 

Credit Suisse analyst Eric Hauser was quoted Monday as saying that “Marchionne identified a Ferrari initial public offering and Magneti Marelli disposal as potential sources of cash, without giving a timeframe. 

“Fiat may value Ferrari at 2.4 billion euros ($3.3 billion), Magneti Marelli will be a much tougher asset to dispose of as 50 percent of sales are to Fiat,” said Hauser, who has a “neutral” rating on the stock. “I guess they'll float Chrysler first and then work out how to finance the exercise of options to get to over 50 percent in Chrysler, between 2013 and 2016.” 

Pending stock listing

Marchionne also took the opportunity to explain the advantages of spinning off Fiat's industrial businesses, including Iveco S.p.A. and CNH Global NV. Italy's biggest manufacturer plans to list Fiat Industrial S.p.A. shares on the Milan exchange on Jan. 3, allowing it to focus on reviving carmaking operations. 

Fiat declined to comment on the analyst reports from the meeting, but confirmed the meeting took place in Turin on Nov. 12. 

Writing in a note to investors, USB analyst Philippe Houchois claimed that Alfa Romeo clearly is not for sale because its will play a key role in Marchionne's five-year plan for Fiat Group. Meanwhile, Morgan Stanley's report said that Marchionne confirmed VW's interest in buying Alfa Romeo, but added that the brand would only be sold for a very high price. 

Fiat, which acquired a 20 percent stake in Auburn Hills, Michigan,-based Chrysler last year, has said it will raise the holding to 25 percent by the first quarter and to 35 percent by the end of next year. 

Marchionne plans to take the U.S. automaker public in the second half of 2011.

Alfa 159 a mistake

According to the Morgan Stanley report, Marchionne also admitted that launching the Alfa 159 was a mistake, but he said he is confident that a U.S. built Giulia will be a "true Alfa."

A Fiat spokesman said the company has not decided yet whether to build the Alfa Giulia in Italy or in the United States. According to a Fiat strategic plan unveiled in April, the Giulia would replace the 159 sedan and wagon at the end of 2012.

Lamborghini predicts return to growth after H2 revenues fall 2.6%

Lamborghini, the Italian luxury sports car brand, remained cautious about 2010 when it posted a 2.6 percent fall in first-half revenues despite continued growth in Asia.

Lamborghini, a unit of Volkswagen's Audi brand, was severely hit by the recession last year, when sales fell 41 percent.

"2010 is a transition year for Lamborghini," CEO Stephan Winkelmann said in a statement on Tuesday, adding that market recovery and brand repositioning would help it return to growth.

The maker of supercars said revenues fell to 152.9 million euros ($199.9 million) in the first half when it sold 674 cars, down 18 percent.

Lamborghini cars range in price from 180,000 euros to 400,000 euros.

Car sales more than tripled in China, its second-biggest market after the United States, to 86 in the period. Lamborghini has said it expects to sell more than 100 cars in China in 2010.

First-half sales in Australia, Singapore, Hong Kong and Taiwan more than doubled.

The carmaker said it was heavily investing in the carbon fiber technology, which boosts power efficiency and helps reduce weight and car emissions.

Lamborghini competes head-on with Ferrari, owned by Italian carmaker Fiat.

Pininfarina eyes year-end debt deal

After months of talks that have forced it to postpone a crucial capital increase, Italy's Pininfarina said today it still expected to reach a deal with its creditors to reschedule its debt by year-end.

Like other suppliers and service providers in the car industry, the small designer and niche manufacturer has been struggling to pay off its debt.

Its business has been suffering since clients such as Ford Motor and Fiat's Alfa Romeo have seen their sales tumble in the worst crisis to hit the industry in decades.

One client, Swedish luxury brand Volvo, has had such a hard time that its owner, Ford, has put it up for sale.

Best known for designing Ferraris, Pininfarina was supposed to have reached an agreement with its creditors to reschedule 600 million euros of debt by Sept. 30.

But the talks stretched beyond the deadline.

Since a deal had been a prerequisite for a capital increase of 100 million euros, Pininfarina was forced to abandon its plans to raise the money in November. It was to use it for a joint venture with French financier Vincent Bollore to develop an electric car, a project pivotal to Pininfarina's revival.

The talks eventually led to Pininfarina proposing the banks convert 180 million euros of debt into shares representing up to 30 percent of the company.

The founding family had been ready to cut its stake to about 30 percent from more than 50 percent with the capital increase to a select group of investors including Bollore. But this latest proposal to the banks, announced on Nov. 12, was seen substituting that idea.

Other select investors had included Ratan Tata. But the Indian business leader has had his own money problems, with his Tata Motors finding it hard raising money to pay the $3 billion bridge loan obtained to buy Jaguar and Land Rover.

In light of plunging sales, Pininfarina has been cutting costs by halting production at its three plants on a rotating basis for one week a month in November and December. It plans to do the same thing for all of 2009.

Its creditors include Italian banks Intesa Sanpaolo and UniCredit.

Ferrari positive on '08, unsure on '09

CEO Amedeo Felisa wants the brand's dealers to do more to improve their stores

 The crisis hitting the auto industry has not slowed Ferrari so far.

The sports car maker is on track to match or beat its 2007 sales record, and CEO Amedeo Felisa is optimistic about next year because Ferrari's newest model, the California, already is sold out.

Felisa, 62, spoke about the brand's future when he met withAutomotive News Europe Chief Correspondent Luca Ciferri at the launch of the California here.

Sales are dropping at most automakers. Why has Ferrari avoided the decline?

So far, we have not seen significant change in our order flow so we remain optimistic about 2008. For the future, we are carefully monitoring the situation as it remains very unpredictable

Another reason for our optimism is the important investments we made in fully renewing our product range.

Our oldest car today is the 612 Scaglietti, which is just 5 years old.

With the new California, we are expanding our range by adding a V-8 front-engine car with a retractable hardtop -- a model that Ferrari has never had in its 61-year history.

The California is already sold out for 2009 and 2010. That means someone who orders the car today has to wait until 2011?

A two-year wait is typical for new models that are in high demand from our customers. It takes 18 to 24 months for the order flow to stabilize.

What is important to me is not the fast start, but the ability to keep the volume up for the entire life cycle. For the California, it is so far, so good.

How long is the wait to get the rest of the range?

The 430 Scuderia and the 599 GTB Fiorano take more or less a year; the 612 Scaglietti takes about six to eight months.

Are you counting on the California to boost Ferrari's sales volume to 10,000 units a year?

We have never given such a target. The California will help Ferrari to broaden its appeal by attracting customers who previously looked to our competitors for such a model.

Of course, the car will help increase our volumes, but we are not planning on such massive growth during a time of such uncertainty.

Our chairman, Luca Cordero di Montezemolo, always says we should offer 'Ferrari diverse per Ferraristi diversi' [Italian for: Different Ferraris for different Ferrari owners].

Time will tell how many of the California sales are conquest sales and how many of the sales come from people who would have bought a mid-engine V-8 coupe or spider from Ferrari.

How many customers does Ferrari have and how many Ferraris are still around?

We estimate that we have 65,000 customers and that there are about 90,000 Ferraris that still exist out of about 130,000 units built since 1947.

Ferrari set a new sales record last year with a volume of 6,465 units. What volume do you expect for the full year?

Similar or marginally up on last year. Do not forget, although the California is in high demand, it does not go on sale until January 2009.

The California is expected to add up to 2,800 units to your sales volume next year and about 3,000 starting in 2010. What volume do you expect by 2010?

First of all, let me say that we aren't interested in volumes. That being said, it's a very difficult to make any forecast right now.

What has driven Ferrari's growth?

Ferrari's growth in the last decade derives mainly from an expansion in the number of markets where we sell cars and a little from increasing the units we deliver to our traditionally big markets. This lets us keep the right level of exclusiveness for our products and helps us protect our residual values.

On average, how much money does a Ferrari customer spend on options to customize the car?

It depends a lot on the market and model, but it is roughly €15,000 to €18,000 per car.

That represents an additional 10 percent on a V-8 model and 7 percent to 8 percent on a V-12.

Ferrari just completed an 11-year, €200 million renovation and expansion of its headquarters and production lines in Maranello. How many people now work for Ferrari?

We are roughly 3,000 people, of which 1,800 work on road-car production, 800 are in the racing department and 300 in r&d.

What is the installed capacity at the upgrade assembly plant?

Twenty units a day.

In the second half, Ferrari reported an operating margin of 20.5 percent. That was the best of any automaker during that period and could be the best result ever for an auto company. Was this a one-time success or is there room for further improvement?

For a company like ours, where there is a significant amount of spending on Formula One racing during certain months, a quarter-by-quarter analysis is not particularly significant.

Ferrari's operating margin was 12.6 percent in 2006. It grew to 15.9 percent last year and will improve significantly this year.

Could you provide a breakdown of your revenues per sector?

Since the company was established, Mr. Ferrari only wanted to reveal how much the company was earning overall. We love to follow our founder's guidelines. Licensing and merchandising are clearly important for us and they are continuously growing. For example, the estimated retail value of all the Ferrari-brand products worldwide is about €1 billion.

Which sector is the most profitable?

In term of return on sales, it is licensing and merchandising by far.

The business accounts for 15 percent to 20 percent of Ferrari's operating profit.

We currently have 25 Ferrari stores. More than half of them are located outside of Italy.

What expectations do you have for your theme park in Abu Dhabi?

We want to expand Ferrari brand awareness to new markets and to a broader audience than just Formula One supporters.

The park will be ready in 2010, which is when the first Abu Dhabi F1 race takes place.

If this park is successful, we could expand the idea to other markets. Trust me, we are not lacking in requests.

Dealers in Europe have complained that they may lose their franchises because of tough standards demanded by the company in August after Ferrari canceled all its franchise contracts.

The cancellation was done in preparation for the new franchise contracts that will be needed to comply with the next block exemption, as the current one expires in 2010.

Ferrari has made significant investments in the past decade to completely renew its headquarters, factory and products. We want our dealers to follow us by upgrading their corporate standards to match what the new Ferrari is.

We have 80 dealers in Europe. If they want to continue partnering with us, we would be happy to continue doing business with them.

At 305.6 grams per kilometer, the Ferrari California's CO2 emissions are 27 percent below the 430 coupe's. Which areas contributed most to the reduction?

The new direct-injection engine and the new design of the cylinder heads contributed more than 50 percent to the improvement. Better aerodynamics contributed 10 percent, the new dual-clutch transmission saved 7 percent to 8 percent, while new tires and new brakes each accounted for about 5 percent to 6 percent of the CO2 reduction.

When will Ferrari offer a car that produces less than 300g/km?

Starting in the middle of next year we will install a stop-start-system on California units that will be shipped to China. Those cars will emit less than 300g/km.

For our V-12 engines, our target is to slash CO2 emissions more than over 20 percent to about 350g/km.

By 2011-2012, new Ferrari models will emit 30 percent to 40 percent less CO2 then our current range.

If you could instantly get something, what would you ask for?

More new technologies from our suppliers.G

Pininfarina CEO dies in road accident

Andrea Pininfarina, CEO of Italian design and contract manufacturer Pininfarina, died Thursday morning in a road accident near Turin.

Pininfarina, 51, died after a car collided with the Vespa motorcycle scooter he was riding to the company's design and r&d center in Cambiano.

Pininfarina's death comes at a time when the family-controlled company is in the midst of a crucial restructuring.

Last year, Pininfarina's consolidated net loss increased to 114.9 million euros from 21.9 million euros the previous year.

Andrea Pininfarina has been Pininfarina's CEO since June 2001. He was also appointed chairman in May 2006. His father Sergio is the company's honorary chairman. His younger brother Paolo is Pininfarina's vice chairman and his elder sister Lorenza is a member of company's board.

Andrea Pininfarina is the grandson of Pininfarina founder Battista "Pinin" Pininfarina. He is survived by his wife Cristiana, and two sons and a daughter.

Prime Minister Silvio Berlusconi said in a statement Pininfarina was "the representative of a dynasty that helped bring the story of 'made in Italy' to the world."

Fiat and Ferrari Chairman Luca Cordero di Montezemolo praised his business acumen.

"Italy, Turin and the Fiat group have lost a business figure who knew how to follow and develop the work of his grandfather Pinin and his father Sergio," Montezemolo said in a statement.

The driver of the car, 78-year-old Giuliano Salmi, was taken to hospital suffering from shock.

"I didn't see him, I was going slowly and I really didn't see him," Salmi said, according to local news agency Ansa.

Andrea Pininfarina was born in Turin, the centre of Italy's car industry, on June 26, 1957 and joined the family business in 1983 after gaining a degree in mechanical engineering.

Art and Design

Pininfarina SpA, which designed Ferraris such as the Dino and Testarossa, boasts of "Experience, Creativity, Innovation" on its Website www.pininfarina.com, where it says it is a company of "art, design, innovation. The cars of kings."

News of the chief executive's death prompted market speculation that its ownership could quickly change.

The shares jumped so high they had to be suspended in Milan for excessive gains and were indicated up over 13 percent pending a resumption of trade.

"The market thinks that ownership change will speed up," said one trader.

On March 10, Pininfarina asked its shareholders for a 100-million-euro capital increase to cover of its losses.

The move means that the Pininfarina family will lose its majority in the company.

The family currently controls 55 percent of Pininfarina's voting shares.

The Pininfarina family will underwrite part of the capital increase and will rely on the support of new investors, such as Ferrari vice chairman Piero Ferrari, Tata Group chairman Ratan Tata and French industrialist Vincent Bollore.

After the capital increase, the Pininfarina family will remain the main shareholder of the company with about 30 percent of the shares.

Pininfarina agreed a deal with its creditor banks last week, which temporarily exempted it from repayments on 600 million euros of debt while it restructures its finances.

It has tried to cut costs as the economic downturn hits carmakers and narrowed its loss to 9.7 million euros in the first quarter, from 9.9 million in the same period a year ago.

Ferrari unveils new Maranello assembly lines

Ferrari's historic Maranello, Italy, complex has long held a certain mystique for fans of the Prancing Horse. But mindful of the realities of modern manufacturing, the automaker has been focusing on upgrading its facilities and on Wednesday unveiled two new buildings designed to improve production.

At a ceremony, Ferrari executives showed off new assembly lines with workstations that reduce worker movement. The building is lined with large windows that offer a view of the 1960s factory built by Enzo Ferrari.

The company has spent 198 million euros since the late 1990s to improve its facilities, including completely revamping the car-production area, where work began late last year. The assembly facility was designed by Jean Nouvel, a noted French architect who won one of the industry's top awards, the Pritzker Architecture Prize, this year.

Ferrari also unveiled a new restaurant for workers in the "Ferrari Village." The impressive structure features a soaring glass overhang and is surrounded by a square for staffers to relax.
Meanwhile, in product news, the company revealed more details about its much-anticipated new GT-style convertible, the California. Most interesting is that the car will have a "launch control" button that will shoot it from 0 to 62 mph in less than four seconds. The technology is borrowed from Ferrari's racing division and allows maximum torque while preventing the wheels from slipping.

Maserati Updates Quattroporte

With a new-from-the-ground-up Maserati Quattroporte not due until 2012, Maserati has facelifted the car for 2009.

The Quattroporte has Maserati's familiar 400-hp, 4.2-liter V8, while the S uses the new 4.7-liter, 425-hp V8 recently introduced on the GranTurismo S. A six-speed ZF automatic is standard with either engine.

Styling changes include a new front fascia with vertical slots � la the GranTurismo, new front and rear lights, new side mirrors and a revised interior with a new navigation system.

The '09 Quattroporte goes on sale late this year.

Hamilton In A Class Of His Own In Montreal Qualifying

Not even a flying Robert Kubica and a track that was breaking up in places could stop Lewis Hamilton in Montreal on Saturday afternoon, as he planted his McLaren on pole position for the Canadian Grand Prix.

BMW Sauber’s Kubica had actually taken provisional pole away from him with a lap of 1m 18.498s compared to 1m 18.886s when Hamilton began his final run, but even though there were marbles in Turns Two, Seven and 10, the Briton somehow found another six-tenths of a second to put pole beyond reach with 1m 17.886s. He described himself as extremely comfortable with the car.

Neither of the Ferraris really got going in qualifying, as Hamilton dominated every session. In the end, Kimi Raikkonen placed his third with 1m 18.735s, but an unhappy Felipe Massa was only sixth on 1m 19.048s. In between them came Fernando Alonso with 1m 18.746s, but the Spaniard may again be using the light first-run strategy that Renault employed in Spain. Behind him, Nico Rosberg placed his Williams fifth, with a strong 1m 18.844s best.

Heikki Kovalainen was seventh in the second McLaren, with 1m 19.089s, leaving Nick Heidfeld eighth on 1m 19.633s for BMW Sauber and Rubens Barrichello ninth for Honda on 1m 20.848s.

Mark Webber will start 10th, but did not run in Q3 after spinning his Red Bull exiting slippery Turn Seven and damaging the right front suspension at the end of Q2.

That session saw Timo Glock out-qualify Toyota team mate Jarno Trulli for the first time, with 1m 18.031s to the Italian’s 1m 18.327s. Trulli had two spins, and will start 14th. Separating the TF108s are Kazuki Nakajima, who lapped his Williams in 1m 18.062s and David Coulthard with 1m 18.238s for Red Bull.

Sebastien Bourdais was 16th overall on 1m 18.916s for Toro Rosso, but was the fastest runner to be eliminated in Q1 and will start at the back after needing his gearbox changed this morning. Team mate Sebastian Vettel will be with him. He didn’t run at all in qualifying as his STR3 needs a new monocoque after his crash this morning.

The Force Indias of Adrian Sutil and Giancarlo Fisichella will thus start 16th and 17th on 1m 19.108s and 1m 19.165s respectively. Jenson Button was 19th overall and will start 18th, his troubled Honda recording only 1m 23.565s thanks to gearbox problems.

The track surface is already occupying everyone ahead of a race in which safety cars are also expected to play a crucial role, such is the unforgiving nature of the Circuit Gilles Villeneuve’s walls.