By on September 23, 2012

In a sit-down with Italy’s Prime Minister Mario Monti , Fiat CEO Sergio Marchionne and chairman John Elkann came to a belated conclusion: A slump in Europe is not such a bad thing of you can sell you cars elsewhere. After the sit-down, Fiat told Reuters that it wants to “re-orient” its business model in Italy “to focus on exports, particularly outside of Europe.” This, the person familiar with the situation said, can mean only one thing: Get ready for made-in-Italy Jeeps and Imported from Torino Chryslers.

Fiat had caused an excrement storm after it said it would halt investments into its European operations and models. It furthermore fanned the flames by stating that a plant in Brazil would gets generous government  aid, while Fiat gets niente from Italy. This caused Marchionne and Elkann to be called on the carpet at Monti’s office in Rome. Both probably didn’t go there with the hope that they would return with a big check.

Students of the European market recall that technocrat Monti served as a European competition commissioner from 1995 to 2004, where he was not seen as a fan of the auto industry. Under him, several European carmakers were fined for their transgressions of free trade. He was a major force behind the European Block Exemption Regulation that busted cushy quasi-monopolies of  carmakers, importers, and dealers and changed the European auto market into a large free-for-all. The carmakers promptly called him (not in his face) “Super Mario,” and the moniker stuck.

It would be foolish to assume that the former free trade hardliner Monti would suddenly flaunt European regulations that generally forbid government support for ailing companies.

At the Monti-meeting, Marchionne and Elkann threw their hands up in “che cosa fameo???” fashion Fiat outlined its forecasts for the Italian and European markets. Then, a statement was issued. TTAC provides the translation:

“Fiat confirmed its strategy of investing in Italy, at the right moment, to develop new products to take full advantage of the recovery of the European market.” Translation: Don’t hold your breath, or you’ll die.

“The Industry Ministry will set up a working group to examine how to improve Fiat’s export capacity.”  Translation: Ouch, now even the exporting will take twice as long.

When it comes to exports outside of the European market, governments’ hands are tied much looser than in the intra-European trade. The biggest export assistance provided by the governments of Italy, Spain, Greece etc. is a low euro. A weak currency makes for strong exports. Except that Fiat’s northern colleagues made maximum use of the opportunity.

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17 Comments on “Monti Meets Marchionne, Seek Salvation In Exports, Pave The Way For Made In Italy Jeeps...”


  • avatar
    Dimwit

    I doubt we’d be getting much. Brazil, OTOH would be a prime target.

    • 0 avatar

      Brazil has high barriers in place that protect the market from this kind of thing. Over the last 6 months the government has enacted some measures that cut imports of Kia, Hyundai and assorted Chinese by more than half. Even Mexican imports to Brazil have been cut, thoug we supposedly have a free trade agreement with that country. I think you will see an increase of Italian Fiats here but their pricing will make it but a trickle. Don’t think exporting to Brazil will save Italian Fiat.

    • 0 avatar
      th009

      @Dimwit, it doesn’t need to be Fiat-branded. There is no reason why Jeeps, Dodges and Chryslers couldn’t be built in Italy.

      • 0 avatar
        Dimwit

        Oh it’s not that, it’s the fact exporting them to the US along side domestic versions. Can you imagine a Caravan from Italy against a Windsor one? I can just see the complaints. First, you’re taking product from Windsor and second, I don’t care how good the Italians are, it’s not the same as the people that have been building them since 1978. Same thing as the people in KC. If just one of the Italian Jeeps ever came back for a warranty problem and it’s a different issue than “normal” the blogs would light up like a xmas tree! Lose/lose for both FIAT and Chryco.

        Now, sending GC’s and Wranglers to SA and Mexico might be different. I wasn’t aware of the tarrif thing, thanks Marcelo!, but it would make sense to me not to cannibalize your markets but support your strong ones with different products than your usual lines.

      • 0 avatar
        mcs

        “Can you imagine a Caravan from Italy against a Windsor one? ”

        No problem. Just make the Italian versions Prada or Gucci editions make it clear to the customers that they were Italian made. They’d have absolutely no problem moving them – probably at a premium price.

      • 0 avatar
        Dimwit

        Holy crap! That’s brilliant! Never would have thought of going the bespoke route. Given that there seems to be about a $10K price difference between Chryco and their competitors that’s a lot of manoeuvering room.

  • avatar
    Bela Barenyi

    Sorry to be pedantic, but this is nothing “new”, so it’s not really “newsworthy”. The production of a smaller Jeep model at an Fiat plant (Mirafiori) alongside a Fiat version of the same car (read: 500X, shown at the presentation of the 500L) was on the cards before this meeting and mentioned many times. Sergio also mentioned the possibility of using excess/unused capacity at Fiat plants in Italy for Chrysler models. So this is also not really “news”.

    The whole reason for this meeting was to calm down the “excrement storm” in Italy. Monti can now claim “I/We did something” and Fiat can claim “look, we’re cooperative, we even talked with the government”. Of course Italian public can’t be fooled by this, but
    at least the media coverage may calm down a little bit and everybody can carry on “business as usual” till Fiat announces anything newsworthy concerning the future of its Italian plants.
    Setting up a “working group” is only a sign of not knowing what to do. A German saying says: “Wenn Du nicht weiter weisst, gründe einen Arbeitskreis” (Translation: “If you don’t know what to do, set up a working group”)

    This all reminds of the state visits of the German chancellor in China when some stupid journalist ask about the topics she and her Chinese colleague talked about. She (Angela Merkel) always stresses that she talked about “human rights” with her Chinese counterpart.
    At the same time the Chinese official makes jokes about her:
    “I asked her whether she’s a transvetite. Last night we were at a karaoke bar and I asked her whether she has a “Schniedel”. Yes, that’s a German word. S-C-H-N-I-E-D-E-L… *giggels like school girl* German words are funny! I know more words, like… Bier …and Oktoberfest…Bruuuuuueste ! This means “breasts” *giggels* She said that she’s a real woman and not a transvestite. Then she started to talk about human rights, but I had to pee and went to the restroom. When I came back, she was still talking about that human rights stuff. I ordered another round of rice wine. After several rounds of rice wine she stormed the stage and started to sing “Happy Looking for Freedom”. Her assistants tried to drag her down from the stage. It was very funny. *giggles* After her perfomance she fell asleep and was carried to her car and was brought to her hotel. Those Germans, they know how to party and you gotta love them! *giggles*”

  • avatar
    Morea

    @ Bela Barenyi

    What about Alfa? Can you give some news that will soothe the souls of the world’s Alfisti?

    • 0 avatar
      Bela Barenyi

      @Morea

      Unfortunately, there’s no real news for the Paris Motor Show next week, as there will only two “limited edition” Guilietta and MiTo, but nothing to be excited about. The production 4C was meant to
      be shown Paris next week, but the launch was slightly postponed and will be shown/launched in January 2013 at the Detroit motor show and at the 2013 Geneva motor show in March.
      There was “facelift” and a five-door version for the MiTo planned, but this was cancelled or be more precise postponed, because the
      launch of the new Fiat Punto was also postponed to 2014/2015 and the MiTo is based on the current Punto. There was also more or less the rumour of a Giulietta Sportwagon (read: estate/station wagon), but it seems that it was just a rumour or cancelled/postponed, but this was never officially anounced.
      The Alfa CUV (compact SUV) was meant to be launched in 2013, but in the last months it was really quite around this model. The only hint that this model will be introduced in the near future was the anouncement that production of the Jeep Liberty ended on the 16th August at the Toledo plant and that the plant is prepared for the introduction of the Liberty successor which happens to share the underpinnings/platform with the planned Alfa Romeo CUV. It seems that the launch of the Alfa CUV is postponed to 2014, but this raises the question whether the Fiat dealers in the US will be happy to sell only the Alfa Romeo 4C in 2013. But a couple of days ago, at the Las Vegas dealer presentation at the 10th September two new Alfa Romeos were presented to the dealers. One was definitely the production version of the 4C and the other was the final design of the Giulia. The launch of the latter is/was sheduled for 2014, so I don’t know why they showed a car whose launch is more than one year away.
      To sum it up, the next two-three years will be crucial for Alfa Romeo, as the new models will be finally introduced. There’s no excuse for Fiat to postpone the re-launch of Alfa Romeo anymore, because the main focus lies in the re-entry of the US market and the car sales in the US were/are more healthy than in Europe (so Sergio can’t justify any investment freeze/further postponement of investments). For the Alfa Romeo dealers in Europe the current situation is difficult, because the model line up consists of two models (Giulietta, MiTo) and 2013 won’t bring any improvement, because the 4C is just a niche model and the launch of the CUV seems to be postponed to 2014. As regards the latter, there was recently the rumour that there might be also a Chrysler CUV, which will be also rebadged and sold als Lancia Agrippa, which is a little bit confusing as it would mean three CUVs (Jeep Liberty successor, Chrysler/Lancia CUV and Alfa Romeo CUV) and would contradict the plan to avoid “line-up overlaps”, like one model sold under two or more different brands.

  • avatar
    acuraandy

    Imported from Detroit, huh?

    Called this one, boys. Jeeps Imported from Italy?! There’s probably some WWII vets spinning in their graves at the mere thought.

    Hate to say I told you so, but, I TOLD YOU SO. Fiat+Chrysler=Italian made 300s and Wranglers. Those who dismissed this as paranoia should read the writing on the wall.

    The recent highway robbery by the CAW probably didn’t help matters. Marchionne is, once again, just doing his job; maximizing the bottom line of Fiatsler. Nothing more. That said, as a US taxpayer, Senor, YOUR WELCOME. Bring over a Demon Dart in 2 doors and maybe, JUST MAYBE i’d buy Pentastar again. BIG maybe.

  • avatar
    jimboy

    Lots of blather going on here, so I’ll keep it simple. Large cars, crossovers minivans will be done in NA by Chrysler, small/midsize will be done in Europe by Fiat.
    I am speaking of design and engineering, as each company excels in different areas.
    As for production, its most likely the cars will be produced close to where they are sold in the most volume. Small cars in Europe and Large cars in NA.

    Saying 300’s and Jeep will move to European plants is a fools game, it depends on plant capacity and demand.

    To build a Punto in NA, and a 300 in Europe would be economically unfeasible, and we all know Sergio is nobody’s idiot. The 200 and 300 will continue to be built here and the 100 will probably be built in Europe. There will be a small Jeep built in Europe, probably for Europe, and some of those may come here, or may not.
    The bulk of Jeep production will stay exactly where it is as will Ram models and probably the majority of Dodges, since they are non European models. What’s everybody panicking about?

  • avatar
    LDMAN1

    The myth of salvation through export, again?! Fiat has been ignoring markets outside the EU and Brazil for too long. They have neglected or destroyed their dealer network outside of their core markets, and focused on small diesel or ethanol, hatchback, and manual cars. Sorry, but the world drives gasoline engines, sedans, big SUV and automatic gearboxes which are currently in short supply or hopelessly inept when compared to their international competitors.
    Most the emerging “international” markets are US Dollar friendly. Fiat Group invoices in Euro which fluctuates widely and is overvalued compared to US Dollar. That does not help the pricing, positioning or dealer margins.
    Internationally, the Brand equity is in tatters or at best a non existing entity. Unfortunately, the pricing does not take this into account. It takes a lot of convincing for a customer in an international market to buy a Fiat over a Kia, Hyundai, or any of their main competitors. Their main competitors have established retail values, a ready supply of independent suppliers of parts and labor ready to take over from the dealers when the warranty expires.
    Frankly I do not buy that Fiat will be able to conquer markets where Korean, European or Japanese Manufacturers have been investing for 20 years quickly enough to recover through international markets.


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