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.
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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.