Category Archives: Production

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Fiat Palio, the most produced car in Argentina

The new Palio is produced also in Argentina since April 2012

The new Palio is produced also in Argentina since April 2012

Good news come from South America. In November 2012 the new Fiat Palio was Argentina’s most manufactured car. All car makers produced 78.000 units, 3.2% more than previous November, but 1.8% down compared to October 2012. YTD production is down 9.4% to 703.472 units, making of Argentina the third largest producer in Latin America and above other important markets such as Italy. In that month the new generation Palio was the most produced car over there with almost 6.000 units. Fiat produced more Palios than traditional leaders like the Ford Focus (5.115) and Chevrolet Agile (5.090). Most of this production is headed to Brazil, where the demand of this car is growing up so fast that is getting close to Fiat’s best-seller Uno (November YTD indicates that Palio demand is up  81%). In Argentina the new Palio is also very popular but as a big part of local production is sold out in Brazil, Fiat can’t supply the demand and people must wait for months to get their car. That’s why the demand for Argentinian market is so weak (up only 4.1%). The new Palio is being produced in Cordoba, Argentina, since April 2012. At the beginning they produced around 200 units per day but they want to increase it up to 500 units. The car is produced with 3 different engines: 1.4 Evo, 1.0 Flex and 1.4 Flex for Brazilian market. Initial target was to produce 60.000 units of both, Siena and Palio, by the end of the year. YTD November figures show that Fiat has produced 66.682 cars. They made it but 2012 numbers are far away from last year results. In 2011 Fiat produced 110.000 units, with the Siena counting for 78%. Among all car makers in Argentina, Fiat is the one with the deepest fall in production, down 39%. VW is down 12%, GM -6%, and Ford -13%.

Argentinian industry is down 9% due to less local demand and economic problems regarding exchange rate and inflation. Fiat's share is 9.5% compared to 9.8% of demand market share. Source: ADEFA

Argentinian industry is down 9% due to less local demand and economic problems regarding exchange rate and inflation. Fiat’s share is 9.5% compared to 9.8% of demand market share. Source: ADEFA

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Fiat Brazil has announced that double airbag, ABS and EBD are now standard for the entry version of the Uno. This is a response to two facts: from January 2014 all cars produced in Brazil must count on this features. And secondly, because the Uno is losing market share and its sales continue to drop. Fiat wants to increase the competitiveness of the model just as it did with other versions of it (the Way and Economy) and Fiat Strada Working in October. The price of the car rises R $1.000 (US$480): Novo Uno Vivace 1.0 3P (US$12.150) and Novo Uno Vivace 5P (US$12.960). The demand of this model has fallen 5% so far this year.

Two airbags, ABD and EBD are now standard in entry version of the Uno

Two airbags, ABD and EBD are now standard in entry version of the Uno

Yesterday Maserati launched the new Quattroporte in Nice, France. The car was presented officially to specialized press in an event hosted by Maserati’s CEO, Harald Wester. According to him, Maserati expects to sell 13.000 units of this new flagship next year (prices start around 145.000 euro). USA will count for a big part as they want to make use of 2.300 Chrysler dealerships all over the country. The Quattroporte is the first step of a 2015 goal of selling 50.000 Maseratis worldwide annually. Then will come the SUV Levante (aka Kubang) and a smaller sedan, the Ghibli. Finally, by the year 2015 the new GranTurismo and GranCabrio will make their debut (they are expected to be lighter and may use Alfa Romeo 4C base). Maserati sold 6.159 cars last year, and the fact they want to sell 8 times more in just 3 years makes some analysts not to believe it. IHS, a specialized provider of diverse global market and economic information, said that Maserati could sell 28.100 cars by that year. Others, like Euromonitor, think that the brand has the right reputation and clients coming from USA and China, but the target is “incredibly ambitious”.

Maserati wants to sell 13.000 units of its new flagship next year. Photo by: Autopareri.com

Maserati wants to sell 13.000 units of its new flagship next year. Photo by: Autopareri.com

Fiat has announced it will lay off around 1.500 workers, a third of its workforce, at its factory in Tychy, Poland. It is a response to lower demand of the cars produced over there. Fiat is the largest car producer in Poland and in 2009 they manufactured 600.000 units and this year it is expected to be under 350.000 cars. Volume for next year is expected to be around 300.000 units. Currently Fiat Poland produces the 500 for European and some Asian markets, its twin from Ford, the Ka, the second generation Panda and the new Ypsilon. However by the end of this month the Panda output will be halted forever as the new model completes one year in the market. The reduction of production levels is a fact expected by many as Fiat decided to move the production of the best-seller Panda to Italy. By that time Fiat said nothing would had happened to Poland output as the new Ypsilon was going to be produced in return. Nevertheless the Ypsilon is a popular car but only in Italy and now faces tough times with sales drop of 17% so far this year. It also means that Fiat may not be considering Poland for making its next C-Segment (aka Fiat Viaggio hatchback) for European market. Turkey or Serbia are in mind?

Source: ADEFA, Autoesporte, Automotive News Europe

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Venezuela: a rebadged Fiat could see the light

This is how the rebadged Fiat Siena could look in Venezuela under Dodge brand. Illustration by Autosblog.com.ar

According to Chrysler executives in Venezuela, the company is getting prepared for a ‘new’ B-Segment car. Human Resources director for Chrysler Venezuela, Mr. Wilfredo Trejo, said the company has already invested $47 million to adapt their factory to the production of the new model. The car, that may be called Dodge Forza, will be available from the beginning of 2013 but is not clear if it will be available outside Venezuela. Based on information from that country and Argentina, the Forza will be based completely in the first generation Fiat Siena, still available in South America. Both brands, Chrysler and Fiat, have always had an important market share in Venezuela. Last year Chrysler 9.245 passenger cars, from which 4.692 were Jeep Grand Cherokee, 2.926 Jeep Cherokee and 1.807 Dodge Caliber. Fiat, which used to be one of top 3 best-selling car makers, sold 1.281 Siena and 318 Palio*. The brand was severely affected by restrictions on imports, but the Argentinean Siena was selected as one of the models to be directly imported by the government. Chrysler has an assembly plant in Valencia and makes the Grand Cherokee, Cherokee, and Caliber, while Fiat closed its plant in late 1990’s as Brazilian product was more competitive. In 2011 more than 105.000 passenger cars were sold in Venezuela, from which 37% were ‘B-Segment’ cars, 21,5% ‘C-Segment’ and 19% were all types of pickups. The market reached its top in 2007 when more than 492.000 new cars were sold.

Source: Guia Motor Venezuela

* FGW Data basis

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Fiat-Chrysler to exploit the small platform

Photo by 500blog.blogspot.com

The platform Fiat uses for its Punto and MiTo will soon be available in much more models. The idea is to build future larger cars such as minivans and SUV, for many brands of the group. The first model to use it is the ‘B-MPV’ Fiat 500L which goes on sale in Europe this month and in the US market next year, all of them built in Serbia. But Fiat wants more and is expected that a small SUV under Fiat and Jeep brands will use it too. It is unclear if next generation Jeep Compass/Patriot, which belong to ‘C-SUV’ segment, will use this platform as it can be enlarged up to 4.4 meters in length and can be equipped with petrol engines up to 2.4 liters. Fiat calls this platform the ‘Small’ one, while the CUSW platform is the one for larger models such as the Alfa Romeo Giulietta that is the base for Dodge Dart/Fiat Viaggio, and may be the same base for future Chrysler 200 to be presented in Detroit 2013.

The idea with the use of the ‘Small’ platform is to offer several models from a unique base so Fiat can save money building the cars wherever they need to. It is also part of Fiat plans in Italy after the meeting Sergio Marchionne and John Elkann had with Italian government. The main conclusion after the meeting is that Fiat and the government will look for solutions to enhance local production more focused on exports to American market. Obviously it means that they will have to work hard on more competitive models so they can some success in that difficult market. Marchionne asked for government financial help as it happens in Brazil with their new factory in Pernambuco. The hard thing is whether Italian government can do it when it is facing so many problems with the debt. If it is just a matter of getting lower interest rates for loans it is certainly a good move, but if Fiat wants the government to be an active part of the solution, personally I think it will not solve anything at the end. If there is any company that always depends on public help when things don’t work, it means that something does not work, and public intervention means less independence and more problems with unions.

Source: Automotive News Europe

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European car industry crisis. A possible solution?

Europe’s debt crisis and its impact on car industry has become a regular topic among automotive analysts. On a daily basis, specialized press and automakers’ CEOs talk about it in several statements which sometimes can result in an alarm for coming months. And it’s true, the worst has not come yet and it is why VW CEO, Ferdinand Piëch, opened up the discussion about the future of European car makers. He said that current crisis will eliminate one of the big ones of the region as the market will continue to get smaller and production over capacity will be that big that at least one big car maker will disappear. This statement must be analyzed carefully as it comes from Europe’s largest car maker and one of the few that is not having problems at all. No matter whether it is true or not, what Piëch wants is to create even more chaos and uncertainty not only among other car makers having problems right now, but among car buyers who will choose those brands with a ‘brilliant’ future. VW is against Sergio Marchionne’s proposal of controlling over capacity by all car makers in the continent. They earn money thanks to great and boring products while they make use of overseas earnings (China) to compensate the possible losses they could have in Europe. Meanwhile the other ‘big’ are dealing with their own problems: Opel struggling with everybody to keep being protected by GM; Ford loosing more than 1.000 million euros; PSA dealing with French government to close one of its big factories; Renault looking at its operations in South America and Asia to endure the storm; and finally Fiat dealing with a big fall in its native market and fighting with labor unions to rise the productivity.

Ferdinand Piech from VW. Sergio Marchionne, Fiat. Carlos Ghosn, Renault-Nissan. Piech says one big European car maker will disappear by the end of the crisis. Marchionne wants to decrease European production levels, while Ghosn says nothing important will happen during the crisis. Photo by: Automovil Online, Jeff Kobalsky, El Comercio

Today, Renault-Nissan’s CEO, Carlos Ghosn, said nothing extreme will happen. But the thing is not to predict what will happen in the coming years. What all carmakers must do is to find quick solutions to current problem. Of course the first ‘remedy’ is to fire employees. PSA is planning to fire around 10.000 workers so they can reduce expenses and therefore the losses. Meanwhile Marchionne said today that Fiat will not close anymore plants in Italy but will send workers home for more days. All these decisions will solve the problem for some months but at the end the real problem will be the same: more production capacity than demand for the coming years (some say until 2020). After considering this terrible scenario it came to my mind how this 5 big carmakers could get out of the crisis. They have a lot in common and share the same threat, VW domination in Europe. All of them can be classified as mainstream car companies which produces all kind of vehicles, from small A-Segment cars up to big LCV. If they do not move VW will pass from current 23% market share to a bigger part of European market and from that moment trying to stop it will be almost impossible. So, if they are so similar and have the same problem, why not to join forces? it is not about an alliance as it is known so far. But it is about creating a special group composed by GM, Ford, PSA, Renault and Fiat, only for Europe in order to get out of the crisis and stop VW growth. But how could they join forces if they are competitors? how could they share any project if they have interests not only in Europe but outside?

VW is becoming a giant in Europe. If the other big ones don’t do anything they will have even more difficult times in the coming years.

One of the possible solution for them could be to specialize each company on what it can do best only in European market. If they stop competing among them they could get better sales figures producing the cars they do the best. And if European market is divided into segments, well they could divide the market and their production according to the segment they dominate. In other words each car maker would be assigned one segment to produce a car to be sold under all brands. So, if they are 5 car makers they could select the top 5 European main segments by sales figures and then assign each one to a specific car maker. For example, Fiat is the absolute leader of A-Segment in Europe, so for the coming years and exclusively for Europe, Fiat would only produce small cars in its Italian factories to be sold not only under Fiat brand but also as Peugeot, Citroen, Renault, Opel and Ford. Following the example, PSA could produce in France the B-Segment car for all brands. Then Renault could do the same for C-Segment, and Opel could make the D-Segment offer in Germany, while Ford would be in charge of producing all MPVs of the European ‘alliance’. Doing so, the big 5 would benefit from cost savings as they would work together in the development of each car, while they could enhance their local production as more units would be required to fulfill the demand of not only one brand but five. In the example, Fiat would not produce 250.000 units of its 500 and Panda but would have to increase the production up to 600.000 or 700.000 units that means the A-Segment for the 5 makers (last year around 1.2 million units were sold in Europe and VW did not count for anything of them as they had not launched the Up/Mii/Citigo yet). Fiat would increase the production of small cars using its plants in Italy, where it now produces other segments such as the Punto or Bravo. The production of those segments would move to other factories of its allies. In the example, it means that the Punto would now be the result of a unique model developed by all 5 car makers but produced in PSA factories. Of course, for every segment, each car maker would apply a deep design work to differentiate each model from the other brands and keep the family feeling.

Source: Fiat Group’s World Data basis

There are several real examples of this kind of deals and Fiat is part of them. The 500 and Ford Ka produced in Poland, or the Fiat Doblo and Opel Combo produced in Turkey. Or the Suzuki SX4 and Fiat Sedici in Hungary. The difference now would be that not 2 but 5 car makers would be involved in the deal. Of course not all segments have the same size. In 2011, almost 1.2 million units were A-Segment, B-Segment counted for more than 3.3 million, not far from 2.9 million cars sold of C-Segment. Over 1.5 million cars were  D-Segment and all MPV segments sold 1.6 million units*. Therefore in the example, Fiat would be in charge of a segment which is much smaller than the one assigned to PSA or Renault. How they could solve these differences? if for example, Fiat has to produce the A-Segment it would focus all its plants to build the small car but it could also produce some part of the B or C segment car, so PSA would not only produce the major part of B-Segment but some part of it would move to Italy to compensate for the smaller part Fiat got. In other words each manufacturer would do what it can do the best but would not have a dominant position in terms of production. Does it mean that a company like Fiat would have to stop building the Punto, Bravo or the Giulietta to give some space to more production of the Panda? yes. For the coming years Fiat would not have an authentic B, C, D or MPV offer but the result of a work together with Opel, Ford, PSA and Renault. Doing that Fiat would benefit from lower development expenses and from the increase of its production in Italy, while the competition would not be as hard as it is now, with not only VW in the field but several others trying to get more market share with a price war. It also means that at the end the 5 big would decrease a part of their production capacity but in a controlled way and all of them doing it, something that Marchionne has been saying from the beginning of the crisis.

As they are independent companies the idea must only work in Europe and the ideas and developments got by the team work can not be taken by anyone to develop car outside Europe. If the problem is in Europe the solution must be exclusively over there. Problems? a lot. First of all, none of the carmakers cited before will want to share independence especially with direct competitors. Second, some carmakers have developed their own models for next years: Fiat presented the Panda in 2011, Peugeot showed the 208 in 2012, while Renault has just shown the new Clio. It also means that all of them must reduce current production levels and maybe fire more people, but at the end they could do it carefully and after an agreement between them, while the big VW could be finally worrying about real tough competition. What would VW think about this idea?

*FGW data basis

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Marchionne points how to get out of the crisis

Once again Sergio Marchionne is the source of news. This time, as usual from last months, bad news. Yesterday at the presentation of Fiat 500L, he surprised the press when he said that one of Fiat’s plant in Italy could be closed. It would be the second one after the one in Termini Imerese in Sicily, closed in December 2011. “If current overcapacity conditions continue within the next 24-36 monts, there is one factory in excess in Italy” said Mr. Marchionne. Nothing precise but again one more warning from Fiat’s AD to Italy’s authorities looking to change current labor conditions and make easier the production of cars in that country. Of course it was just a estatement, but after it he practically confirmed his intentions. He said he was not expecting good times in Europe for the next 24-36 months and again he defended the idea of cutting $500 million in Europe’s investement included the launch of new generation of Punto, “it would be a flop” he said.

Italian Fiat’s plants. Source: Corriere della Sera

Currently Fiat has 5 production plants in Italy, all of them facing real tough times. The largest one, Val di Sangro in Chieti employs 6.217 people and in 2009 used only 33% of its capacity and is expected to use 69% by the year 2014. According to Italian newspaper Corriere della Sera, estimations for production in the other plants is better but a bit pessimistic and opposite to what Marchionne thinks will be the market in the next 2 years. 2 years ago Fiat signed an agreement with Italian government to bring back the production of more cars to Italy as part of Fabbrica Italia plan. Today the situation is completely different although Fiat kept its word bringing back the production of its bestselling mini car, the Panda from Poland to Pomigliano plant. It is perhaps the plant with better future as that model is very popular in Italy and will continue to be Italy’s best seller. But things don’t work like that for the other plants. Mirafiori factory in Turin, Fiat’s first plant, faces a big challenge: or it changes or it disappears. Nowadays just produce the Alfa Romeo MiTo as the Lancia Musa and Fiat Multipla are no longer produced. The MiTo has never been a success not even in Italy and now is living the decline period of its commercial life. It means that the big Mirafiori plant needs urgently more models to produce if it wants to survive. Fortunatelly for Turin, Fiat is thinking to produce there the new family of small SUV for Fiat brand and Jeep to sell not only in Europe but in America. Actually, yesterday during the presentation of the 500L, Olivier Francois, Fiat brands CEO, showed a quick outview of what will be the Fiat 500X, the compact SUV based on the 500 and that will share body type and components with a future small Jeep.

Fiat 500X. The model was quickly showed during the presentation of the 500L. Photo by Autoblog.com

It all means that for coming years Fiat must face the current crisis doing both: closing a second plant and using the remaining ones as its maximum as they will export to America. The first option seems to be easier because European made cars have never been popular in the US market because of Currency reasons. However it is expected a less expensive Euro and it would allow European cars to be more competitive in the opposite shore. Toyota will soon do it with its Yaris to arrive in America from its French factory. The lack of demand in Europe could be replaced by the good times car industry is having now in USA and Canada, and it could fit perfectly for Fiat-Chrysler as their American plants are working almost 100% of their capacity (see production problems for Jeep Wrangler) and they need other sources of production. If Italian plants continue to depend exclusively on European market their future will be committed as short and midterm situation will not improve. They need to look outside Europe: America, Africa and Middle East. The possibility of closing a plant was one of the headlines of Italian news yesterday. Actually the governor of Piemonte region (where Fiat was born), Roberto Cota, said that Fiat has had a lot from Piemonte territory and must not forget it. At the same time Susana Camusso, the general secretary of CGIL, one of Italy’s most important Labor Unions, said that the government should look for another car maker to come and produce locally, “also Japanese could work”, she said. To close a plant has never been easy for any producer. It means less investment and more unemployment. Marchionne knows it and that’s why he is just making assumptions that at the end will become a reality.

The Cassino plant in Frosinone where they produce the Bravo, soon to be replaced by a Chinese model?

But what to do in this case? if Fiat is loosing money in Italy and situation does not seem to get better, they must do something quickly. Of course the easiest way is closing a factory or firing people. But there are more solutions. Italian government could help not by giving incentives but changing the labor conditions there are right now in Italy. For Mrs. Camusso is easy to say to bring other car makers to the country, but which one could come to Italy with current labor conditions? I personally doubt that any car maker would invest in Italy if they keep labor code. It is not about becoming the new China in terms of workforce and welfare, but it is to understand that the world has changed and Europe can not be competitive anymore if they keep their status quo. There is now more competition from the south and  investors are looking there to take their money. And it works not only for car industry but for everything. Italy must change. Otherwise the complains saw in the press about the origin of the new Fiat 500L will become an usual fact. Complains about the fact that the car was going to be produced in Serbia while Marchionne was thinking to close a factory in Italy. Of course are not good news for Italy, but Italians should think about the reason for this, because the 500L was initially going to be produced in Mirafiori plant but then Fiat decided to shift it to Serbia as non flexible labor conditions and strikes have become an usual scenario. Fiat must keep Italy as one of its core markets, but Italy must reconsider its relationship with Fiat.