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Earth to Media: The Fiat Fun Has Just Begun

Today’s lead Financial Times op-ed had an incredibly inaccurate portrayal of Fiat and its boss, Sergio Marchionne. The editor published our letter, and here’s what we sent in:

Dear sir:
I respectfully and strenuously disagree with many of John Gapper’s opinions he penned in his piece entitled, Fiat’s lone poker player needs to find another deal. Mr. Gapper is perpetuating the self-reinforcing cycle of negative opinions surrounding Fiat, created in part by biased German and British sell-side coverage. This sentiment has helped depress Fiat’s valuation, which has allowed it to be one of the best investments we’ve ever found. Despite Mr. Gapper’s allegations, were he to have actually talked to employees of either Fiat of Chrysler, he would have realized his accusations couldn’t be more opposite than the truth. Walk around Chrysler’s headquarters and employees are visually fired up- finally they have a management that has given the organization a new sense of purpose and competitiveness. Every major product launch under Marchionne’s leadership has helped Chrysler to continue to take market share, and the company’s products like the Grand Cherokee and new 200 are being compared to the offerings of luxury foreign brands.

Since the launch of the Cherokee in November, Chrysler has been taking the most market share in the US of any automaker. In our discussions with multiple Fiat employees, they convey there’s a permeating sense of gratitude in Marchionne’s leadership, which has kept the company alive and will see it thrive in the coming years, if not already. Indeed, had Marchionne not arrived at Fiat in 2004 and Chrysler in 2009, it’s highly likely that over 200,000 employees would have lost their jobs. We ask Mr. Gapper, would an autocrat that shuns team-building actually locate his desk on the engineering floor and eschew the top-floor execute offices? Furthermore, Fiat’s market share losses in Europe are not due to a lack of product, but are due to Italy’s declining share of the entire European market. The Fiat brand has been gaining share in most other major markets in Europe this year, and is poised to build on this next year with the introduction of the 500X. Additionally, Fiat-Chrysler is outspending Ford on an absolute basis, and far outspending GM as a percentage of sales. We welcome the misunderstood, high-profile opinions of the company. Mr. Marchionne will continue to defy them, and as shareholders, we will continue to make healthy returns. Shareholders under Marchionne have already enjoyed double the return that Mr. Gapper’s beloved Mulally has produced at Ford during his tenure. Mr. Gapper may want to re-check his opinions, and then he may want to buy some shares of Fiat’s stock.

Steven Wood, CFA New York, NY

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