Fiat Chrysler headquarters will be in London, Marchionne says
Marchionne: Office in London.
Photo credit: REUTERS
DETROIT -- The headquarters of the newly merged Fiat Chrysler Automobiles will move to London, CEO Sergio Marchionne said on Thursday, cementing a politically sensitive shift away from Italy, Fiat's home for the past 115 years.
Fiat currently is based in Turin while Chrysler is headquartered in Auburn Hills, outside of Detroit.
"Headquarters will be in London," Marchionne said during a press conference at Chrysler's headquarters. "It's clear that group executive functions, the board, my office, some of my functions, need to operate out of London, but that doesn't mean that I'm giving up my operational responsibilities of the U.S. We will be multifaceted ... we will do stuff everywhere."
Unions and politicians in Italy have been concerned about any potential job cuts as a result of the move of headquarters, but Marchionne, 61, has repeatedly said the merger would have no effect on jobs in Italy or elsewhere.
Reaction in Italy to the London move was low key. Fiat will maintain its manufacturing position in Italy with plans to expand production of upscale Maserati and Alfa Romeo cars in its historical home. Marchionne has vowed to keep factories open there, taking the sting out of no longer being the base for the company.
"It doesn't matter where Marchionne decides to base his office and company's headquarters since we are interested in him making investments in Italy," said Ferdinando Uliano, head of the Fim Cisl metalworkers union. "Fiat's business plan is good for Italy and ensures full employment. For now, that's it."
In January, Fiat sealed a $4.35 billion deal to take full control of Chrysler, creating the world's seventh-largest auto group. The group said at the time that FCA would have its primary listing in New York, with a secondary listing in Milan, and that the holding group would be registered in the Netherlands and have its tax domicile in Britain.
Choosing London as a headquarters makes sense for several reasons, said John Wolkonowicz, an independent auto analyst. London is a financial capital and centrally located among Fiat Chrysler’s far-flung operations.
It also avoids the baggage of choosing either Fiat’s hometown of Turin, Italy, or Michigan, he said. "If you put it in Detroit, you make Fiat people feel bad and if it’s in Turin, you make Chrysler people feel bad,” he said. “This way it’s neutral ground."
Marchionne also said investors overreacted when they sold Fiat Chrysler shares after the carmaker's presentation of an ambitious five-year plan.
The company's shares fell almost 12 percent on Wednesday as analysts questioned whether Marchionne would manage to multiply sales, raise profit and slash debt, while investing 48 billion euros ($67 billion) in a global expansion led by the Jeep, Alfa Romeo and Maserati brands - and without divestments or a share issue.
Earlier on Thursday, the company said that Marchionne bought 130,000 Fiat shares and Chairman John Elkann 133,000, in a show of support of their ambitious turnaround plan.
Marchionne reiterated on Thursday that any decision on raising capital would be made by the board after FCA is listed in New York, currently planned for the last quarter of this year.
Reuters and Bloomberg contributed to this report.Contact Automotive News