TURIN -- Gianni Coda, the veteran executive named to lead Fiat S.p.A.'s money-losing operations in Europe inherits lot of problems.
On the product side, CEO Sergio Marchionne's freeze on investments since the second half of 2008 kept Fiat Auto in the black during the economic crisis, but Fiat has lost sales and market share in Europe.
In the first half, Fiat's EU sales including the Lancia and Alfa Romeo brands were down nearly 13 percent to 522,000 with market share dropping to 7.3 percent from 8.2 percent a year earlier, according to industry association ACEA.
The decline is set to continue because Fiat passenger-car brand will not begin a big product offensive until 2013 when the Punto subcompact and Bravo compact cars are replaced. A new version of the Panda minicar comes next year.
Lancia, whose sales fell 13.7 percent to just over 52,000 in the first half, may fare better. The brand has just started sales of the new generation of its best seller, the Ypsilon subcompact, while later this year it will begin distributing in Europe low-volume, rebadged versions of Chrysler's 300 large sedan and Voyager large minivan. However, Marchionne's target to triple sales to 300,000 units in just three years looks a giant challenge.
Alfa Romeo is the true black hole in Marchionne's targets, which call for the brand to boost sales to 500,000 units in 2014 from 112,000 last year.
In an extremely competitive European market that will remain flat at best for the rest of the year, Coda will have a tough time to stem Fiat's financial losses in Europe due to the heavy incentives required to move an aging product range.
Fiat doesn't breakdown results by region, but the company lost about 1 billion euros last year in Europe, according to Max Warburton, a London-based analyst at Sanford C. Bernstein.