Jeep causing earnings worry for Italy’s Fiat

Fiat is holding to its full-year forecasts. But its CEO is counting on America’s Chrysler Group to power earnings. Chrysler’s Jeep is retooling several factories

Retooling Jeep for new models is playing havoc with the earnings of its Italian parent, Fiat.

First-quarter profits will fall, Bloomberg News reports. Yet Fiat is counting on Chrysler Group, which includes Jeep, in the U.S. to power earnings despite continued weakness in Europe, Fiat and Chrysler CEO Sergio Marchionne told reporters in Geneva today.

As such, Bloomberg reportsthat Fiat will stick by its full-year forecasts when it comes to earnings before interest, taxes and one-time gains or costs or taken in to account. It hopes to reverse a decline in the first three months, Marchionne said in a comments after meeting with a supplier.

He expressed remorse that there’s no light at the end of the tunnel when it comes to Europe.

His brightest hope is Chrysler, which already has shown its ability to keep Fiat afloat because of vigorous sales in the U.S. Last year, Chrysler saved Fiat from having to report an overall loss. Fiat emerged with control of Chrysler after its 2009 bankruptcy reorganization and bailout by the U.S. government, which is credited with saving thousands of jobs.

Just one problem: Jeep, one of Chrysler sales stars, has several new models on the way. To accomodate them, its plants are having to retool, which slows production. Once Jeep is back in full production — and if its new models are hits — it can contribute vigorously to Fiat’s bottom line. Until then, the automaker may have to hobble along.



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