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Fiat has $12.3 billion investment plan

By Tommaso Ebhardt
Bloomberg News

Italian automaker Fiat SpA, which controls American car maker Chrysler, plans to invest as much as $12.3 billion on new models to end European losses in three years and revive nearly empty Italian factories.

In addition to bolstering the upscale Maserati and Alfa Romeo marques with new “Made in Italy” models, the carmaker will focus the Fiat line on variants of the trendy 500 subcompact and the budget-oriented Panda small car, ditching a former best-seller.

“It’s a brave and historic move to abandon your roots,” said Roberto Verganti, a management professor at Milan Polytechnic and the author of the 2009 book Design-Driven Innovation. “Going upscale with cool, high-margin 500 and Alfa models is the only possible strategy to continue building cars in Italy.”

With the timing uncertain regarding Fiat’s sought-after merger with Chrysler, Sergio Marchionne, who is chief executive officer of both car makers, is under pressure to stem losses in Europe.

While Fiat has previously said it aims to develop about 20 new models for Europe by 2016, including eight Alfa Romeos, the company has declined to comment on a revised European strategy until April.

As part of the luxury focus for Italy, Fiat will introduce 500 and Jeep sport utility vehicles next year as well as a convertible version of the Alfa Romeo 4C sports car.

Fiat has furloughed many of its 30,700 production employees in Italy this year and most of those have been off work for more than five months. The goal is to focus on luxury Alfa Romeo and Maserati vehicles.



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