Ever since Sergio Marchionne snuck in to see the “The Graduate” as an underage teen in the 1960s, he’s had a soft spot for Alfa Romeo, the maker of the Spider Duetto convertible Dustin Hoffman’s character drove in the film.
Four decades later, Marchionne is the chief executive officer of Alfa Romeo’s parent Fiat SpA and wants to return the struggling brand to its former glory. To pull it off, he needs cash from Fiat-controlled Chrysler Group LLC. The problem is that he hasn’t found a way to get it, as a union trust that owns the remaining shares of Chrysler holds out for at least $1 billion more than the CEO wants to pay.
Fiat intends to boost total investment by at least 1 billion euros next year, to as much as 9.5 billion euros. The higher spending is part of the development of about 19 new models in Europe in the next three years, including eight Alfa Romeos. That would be tough for the Italian company to finance without help from Chrysler.
“Fiat needs to generate cash to invest in new models and be competitive, but the cash flow they’re generating is not enough,” said Falk Frey, a Frankfurt-based analyst at Moody’s.