Sergio Says Fiat's Moving Out of Italy, FCA Needs Room for SUVs
Fiat Chrysler CEO Sergio Marchionne plans to to retire soon, and he wants to revolutionize the company as one of his final acts. On June 1st, he intends to unveil a sweeping plan that abandons local production of the compact and super-mini cars the Fiat brand is known for so FCA can focus on larger, more upscale, models.
Fiat, the most Italian brand we can think of that isn’t Ferrari, is moving assembly out of Italy. After being emptied, those factories will be repopulated by Maserati and Jeep SUVs. If you think that’s rather bold of FCA, there’s more. There’s also a very good chance the Alfa Romeo Mito and Fiat Punto will be killed off entirely. Thanks to a decade of steadily declining sales, the Punto has transformed from an European staple to a financial liability. It’s hard to imagine the continent without it, but Axing the model admittedly makes good bit of sense.
However, if FCA keeps culling Fiat and Chrysler’s lineup out of existence, won’t it eventually have to change its name?
According to Bloomberg, the big idea is to shift production of Fiat’s affordable cars to countries paying lower wages. The automaker’s hope is that spending less on labor will offset the vehicles’ slimmer profit margins. For example, the Fiat Panda will likely move from the Pomigliano plant near Naples, Italy, to Poland (where the 500 is built). Pomigliano could then be used to build smaller Jeep vehicles with a higher price tag.
While nothing official has been said by the manufacturer, there has been talk that the 500 and Panda could be Fiat’s only survivors under Sergio’s plan. FCA wants to prioritize production of the lucrative SUV segment globally and make room for its more-profitable brands.
Is it just our imagination, or has the automotive industry collectively decided to abandon affordable cars? If Fiat isn’t going to be make small, budget-focused automobiles, there’s no telling who might be next.
A staunch consumer advocate tracking industry trends and regulation. Before joining TTAC, Matt spent a decade working for marketing and research firms based in NYC. Clients included several of the world’s largest automakers, global tire brands, and aftermarket part suppliers. Dissatisfied with the corporate world and resentful of having to wear suits everyday, he pivoted to writing about cars. Since then, that man has become an ardent supporter of the right-to-repair movement, been interviewed on the auto industry by national radio broadcasts, driven more rental cars than anyone ever should, participated in amateur rallying events, and received the requisite minimum training as sanctioned by the SCCA. Handy with a wrench, Matt grew up surrounded by Detroit auto workers and managed to get a pizza delivery job before he was legally eligible. He later found himself driving box trucks through Manhattan, guaranteeing future sympathy for actual truckers. He continues to conduct research pertaining to the automotive sector as an independent contractor and has since moved back to his native Michigan, closer to where the cars are born. A contrarian, Matt claims to prefer understeer — stating that front and all-wheel drive vehicles cater best to his driving style.
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All of these moves out of car production open the gate for Chinese producers. China is brimming with new ambitious car companies. After satisfying the internal demand they will export. We will see a lot of under $10K compacts in the next 5-10 years. It’s all good.
"Is it just our imagination, or has the automotive industry collectively decided to abandon affordable cars?" Today, if you want an affordable car, you buy a used car. Bottom-of-the-barrel new cars are a relic of the era when you couldn't expect a vehicle to last more than 50-75K miles before needing expensive overhauls, and they didn't even bother to put a sixth digit on the odometer. They are no longer needed in an era where all but the worst cars can make it 150K-250K miles without breaking the bank. And with more mandatory safety features every year constantly driving up the bill of materials, the economics of low-end cars become less and less tenable. The majority of buyers would rather buy an off-lease mid-trim compact CUV than a new base-model subcompact sedan or hatch at the same price.