The current economic crisis and downturn in the automotive industry has left a lot to be desired globally. Worst hit is the European market, where lack of jobs and shut down of plants have added to the misery of the labourers and the companies as well. In a bid to rescue the near empty factories, Fiat will invest $12 billion (Rs. 7250 crores) over the next 3 years on all new models that will be exclusively built in Italy.
Fiat will be manufacturing luxury brands Maserati and Alfa Romeo at the Italian factories and glorify the ‘Made in Italy’ concept on its luxury cars instead of manufacturing them at other locations in Europe. The company has seen a positive market for its luxury cars recently with the Maserati Ghibli receiving 23,000 orders this year, over total sales of 6200 cars in 2012. The luxury cars will marketed as made by skilled Italian workers and will be exported around the world.
As part of the strategy, a 5-door Fiat 500 will be replacing the onetime bestseller Grande Punto in Europe (sigh). The company wants to offer the 500 sub-compact as a more upscale version instead of the Punto, while the lower end customers will get more variants of the Panda to choose from. The new mass-market model will be manufactured in Poland to curb labour costs (since its one-fourth that of Italian workers) and boost profit margins. Fiat will also be sharing development and expansions costs with partner Chrysler and will use its American network for sales and distribution of its luxury cars.
Fiat is planning an aggressive onslaught putting in all they have got to regain lost market share and cover operating losses of over 2 billion Euros since 2011. Fiat also plans to expand the Alfa Romeo brand globally with as much as eight new models out of the proposed twenty that will be developed in different segments. The made in Italy luxury cars will be exported to other markets based on the strategy of German companies like Mercedes-Benz and BMW that manufacture their luxury cars in Germany and export them to other markets to offset wages that are among the auto industry’s highest.
The investment will see Fiat’s 30,000 employees returning back to factories who have been off work for over five months this year. The return of the employees will also give a much needed boost to Fiat and the slumping European economy. The Alfa Romeo Guiletta sedan and the Maserati Levante SUV are two promising models that will also be made at the Italian plants in the future.
Source – Bloomberg News
