Dispatches Do Brasil: FCA's Plans For Latin America

by Marcelo de Vasconcellos

Published: May 9th, 2014

dispatches do brasil fca s plans for latin america

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

#Brazil #DispatchesDoBrasil #Fca #Fiat #Fiat.Chrysler

Marcelo de Vasconcellos

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11 of 51 comments

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 on May 09, 2014
  
  It still exists in the sense that Mexico accepted the quota system that Brazil wanted. So it's now a sort of quota based free trade. Sincerely th009, I see little difference between the candidates. Some focus more on one aspect, the other wants to pay more attention to that. None will throw the doors open. In more than one sense the PT government was a continuation of the previous PSDB government that Neves now intends to represent. The former governments were more focused on austerity, monetary measures to control inflation. The current one believes more in spending. Neither are too radical. All candidates believe it's necessary to protect and foment national industry.
  
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- Th009 on May 09, 2014
  
  @Marcelo de Vasconcellos Unfortunate, I think. In the long term, Brazil needs to be internationally competitive. Expensive real, heavy bureacracy, difficult labour market and protectionist policies mean that local industries have little need to work harder and become competitive. And for the same reason the outlook for Brazilian auto exports is not good, either.
  
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- 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.
  
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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 on May 10, 2014
  
  New Palio rides on the 326. The Uno rides on the slightly narrower and lighter 327. The Grand Siena rides on the 326 but with the Punto's rear axle. Their replacements are likely to be more Punto than 326. Whatever that means. On a side note, the new Fiorino is half 326, half 178-based Strada. But looks like a Uno.
  
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- Marcelo de Vasconcellos on May 10, 2014
  
  @Victor Viquitor, Magnusmaster, that's it. Like Viquitor pointed out on another post, a lot of these platforms are worked on, re-worked on, developed, mashed together, so much so that even Fiat people don't know (just kidding of course, but for effect). Trying to summarize: - the Uno will be re-worked, staying on their current platform, but this platform will receive elements from the hybrid already under the Brazilian Punto; - the Palio/Grand Siena will "leave" the 326 and become closer to the Punto. What that means is still under contention. Will it be a re-worked version of the current hybrid under the Punto, or a mixture of that and some future 500 bits? That is the contention, both are being studied as there is no definition if Punto will even survive. If it does, will it be a re-worked Brazilian Punto (even closer to the Palio) or will it be more similar or even the same as the European one (very close to the new 500)? Same holds true for Idea. There will be one, but linked to Uno or Palio line? Strada the same, right now they are working on a pickup that technically has been described to me as similar to the US Honda Element. It uses the same underpinnings as the Fiorino, but reworked yet again, making the 178 part just part of the "strength" and for the length. Heck everything is in the open. I have even heard people asking that when the current Freemont/Journey moves on, the old tooling come here for them to do what they think they need. Let's see.
  
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- Magnusmaster on May 10, 2014
  
  @Marcelo de Vasconcellos Why can't they just use the European platforms instead of all this improvisation? I get Mini is too small, but why not SCSS/Gamma? GM is already using it. Is it probably due to a license issue with GM or just Fiat being cheap?
  
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- Djn on May 10, 2014
  
  @Magnusmaster My guess is the cost of "Tropicalizando". Brasilian chassis are strengthened and well as beefing up the suspension bits so the crappy roads won't shake the car to pieces in a few months.
  
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- Marcelo de Vasconcellos on May 10, 2014
  
  @Magnusmaster You say improv, they say "high level engineering", ha! Can't really say, Magnusmaster, but it does have to do with costs. They want to strecth all they can out of the peso you give them or the real I give them? Sure, That is not to say that some high level engineering is not going on here. The whole raison d' être of the 178 and 326 lines was the robustness. That has nit gone away. I'm closer to Fiat than other makes down here, I see some things here that I don't at other places. If it means that Fiat does it while others don't I don't know. All of this to say that they have a pretty hefty engineering commitment going on here (Córdoba too). If what they're doing is good or bad, depends on what you value. In other words, they take the tine to develop and bring on (cheaply) what works here. It's either that or One World. I have the feeling some local knowhow is important. Do you?
  
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- 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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