Dispatches Do Brasil: FCA's Plans For Latin America

Marcelo de Vasconcellos
by Marcelo de Vasconcellos

After all was said and done and the dust settled on FCA’s presentation of future plans to investors a couple of days ago, many of us were still left wondering – what does FCA really have in store for Brazil? We all know what the “F” in FCA stands for and there’s a reason why it comes before the “C”. Part of that is the success Fiat has enjoyed in Brazil – which was heavily emphasized in the Fiat brand presentation. Brazil is a good indicator for Fiat’s plans in the Latin American market, and the rest of the globe.

This year, Fiat is doing well, even though Brazil is in a down market this year (Fiat is down about 5 percent). 2013 saw Fiat sell 785,000 cars – impressive given that its domestic production capacity is 800,000 units. Fiat will add another 400,000 units of capacity over the next few years, betting heavily on Brazil as a major engine of growth.

So what did FCA CEO Sergio Marchionne say about Brazil? No new nothing for brasileiros until 2016, when the new factory will kick off production of the new “City” car directly aimed at Volkswagen’s up!. More than likely, it will sport a 900cc two-cylinder engine that can add forced induction, producing 70 to 130 hp while keeping consumption (and emissions) to a minimum.

Besides that, baby Jeeps and Jeeps labeled as Fiat products will also come out of that new factory (4 new models, initially).These new CUVs will sit directly in the meat of the fastest growing segment in the world. Aside from giving Fiat more product, it’s an important step for the internationalization of the Jeep brand.

At the old factory in Betim, Minas Gerais, Fiat will phase out the venerable 178 series of cars, while the new Palio and Grand Siena line will sit on top a version of the platform underpinning the current Brazilian Punto. The new Uno that sits on the 326 platform, an evolution of the old 178, will move up to hybridized version of 326, and the Punto’s platform. The Strada pickup will survive, but its final form is unknown.

As the new European Punto will sit on the same platform as the future 500, Fiat Brazil is at a loss as to what to do with the Linea and Idea. That means that the Punto is, as we say in Portuguese, subiu no telhado (about to jump of the roof). The Viaggio and Ottimo (Fiat’s version of the Dart) also have unclear futures in Brazil. Both were supposed to arrive, but they have been delayed indefinitely.

Part of the reason is that, Fiat Brazil is now a smaller player in the global FCA realm, and must now compete with Chrysler for money. The slowdown of Fiat’s factory expansions in Brazil is evidence of this. However, the contracting car market does help Fiat. As they are operating at among the highest capacities in Brazil, the no launch of new cars is, at the moment, a welcome and lucky break. The current models are very competitive and are doing well in the market. Any new cars might just push the limits of Fiat’s capacity in South America too far.

The Uno, which is the cheapest car in Brazil has just got some “awesome” decorative fluff-ware, enough to keep interest, in the media and public, and keep the old factory chugging along until 2016. Then,Fiat will be ready for action and hungry to get the 1 million plus sales they need down here in order to prove signore Marchionne is right, and that FCA not only has a future, but a bright one at that

Marcelo de Vasconcellos
Marcelo de Vasconcellos

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  • Th009 Th009 on May 09, 2014

    Marcelo, is there any news on the currently-zombie automotive free trade agreement (ACE 55) with Mexico? Is there any likelihood of change if Rousseff is re-elected? Would Campos or Neves be any different? It might not be great for Brazilian manufacturing profits, but the increased competition would be good for the consumers.

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    • Marcelo de Vasconcellos Marcelo de Vasconcellos on May 09, 2014

      @th009 Long-term, sure, we will need to open up. For the moment, based on our educational levels, inefficiencies and other things, I do believe the course is by and large correct, though by no means perfect. Educate these people, then let them loose. It's all I hope for.

  • Magnusmaster Magnusmaster on May 10, 2014

    Don't the Palio and Grand Siena ride on the 326 platform? Or you mean their replacements? Idea will get replaced by a new crossover model. That crossover model will NOT be the 500X, but a new model for emerging markets, which will be based on the new larger compact pickup which will coexist with the Strada for a while. Hopefully they bring the SUSW platform...

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    • Victor Victor on May 11, 2014

      @Magnusmaster It's Fiat being profitable. Hugely profitable. In the early 90's we used to talk about how GM was more profitable than Autolatina, even when the Gol was selling like hotcakes and all GM had was the Kadett and the Monza. It was mainly due to added value. Fiat found a way to make cheap cars more profitable by extending the life cycle of platforms, while keeping people interested via updates that are not quite skin-deep. Amortization of project costs is long finished for the 178. And just think about what they did to the original Uno. Bringing European hardware would be a lot less profitable. They make cars the exact way Brazilians love - they look new, they tell the neighbors who's who at the condo. They drive like crap, but depreciation is fine, maintenance is easy. And that's it.

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