The low-cost philosophy of Turkish manufacturer Tofas has allowed Fiat and PSA to develop a new kind of urban delivery van for European markets. Mark Bursa reports from Bursa, and he’s always wanted to say that.
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The 30-year collaboration between PSA Peugeot Citroen and Fiat on light commercial vehicles is an undoubted success story in the European car industry, producing large numbers of panel vans and people-movers at the Sevel factories in France and Italy.
Now the collaboration has taken a step into the unknown, with the launch of a third partnership to build another family of vans. But this time the partnership has stepped into the unknown, involving production in a low-cost country, Turkey, and a third partner, Turkish automaker Tofas.
Fiat’s relationship with Turkey’s Tofas stretches back more than 30 years. Tofas is in fact a 50:50 JV with Turkish industrial giant Koc Holding (pronounced Kotch) and it has been assembling Fiat cars since it started production in 1971 – it’s made more than 2.7m cars in total since then.
It currently builds the Palio hatchback, Albea (Siena) sedan and Doblo Cargo light commercial vehicle, and Fiat has recently pumped a lot of money into Tofas in order to build the Linea, the new four-door sedan designed for emerging markets that was launched in Turkey earlier this year.
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By GlobalDataThe new vans are collectively referred to as the MiniCargo series. Individually, they’re called Fiat Fiorino, Citroen Nemo and Peugeot Bipper. They’re small – just 3.86m long, making them shorter than the average B-segment hatchback – but with a loadspace of 2.5cu m, and a fold-flat front passenger seat that allows items up to 2.5m to be carried. And both Fiat and PSA believe they will open up a new sector of the market for small urban delivery vans.
MiniCargo was a PSA-led project, said Citroen president Gilles Michel. PSA identified the need for the vehicle, but did not have a suitable plant or a suitable platform on which to build it. It made sense to talk to Fiat, as the two companies already work together on LCVs at Valenciennes in France and Val di Sangro in Italy.
“We went to see Fiat and they found the project very attractive,” said Michel. Both Fiat and PSA submitted designs for the MiniCargo, but the PSA design was selected. “They put on the table their own vision of the project and the volumes and together it did make sense.”
To realise the project, the vans had to be built at a low-cost manufacturing plant, and existing platforms and transmissions had to be been adapted in order to keep the investment levels down. Total investment in the MiniCargo project was EUR380m, EUR190m of which was spent on R&D – “less than usual” for a new model, Michel said.
And it was Fiat’s crucial input in finding both the platform and the production site that allowed MiniCargo to see the light of day. “We still needed a very cost-competitive base because this is going to be our entry level LCV, so it has to be very cost-competitive,” said Michel. “Fiat bought in Tofas which is a very nice fit and this is what made the project possible. Indeed, building the vehicles in Turkey brought cost savings of 20% compared to building it in Western Europe – and that was vital. “This project would not have been realised if it had been produced in France,” said Michel.
The key to the project was a suitable platform – and the Fiat Linea’s platform – basically a beefed-up Grande Punto – fitted the bill. Meanwhile Tofas’ highly automated factory in Bursa, Turkey, is a perfect low-cost base for the project. With Tofas coming on board as a partner as well, the investment costs have been spread across three companies, so the project should be profitable even at relatively low volumes – 160,000 vehicles will be built in a full year, two-thirds for PSA and one third for Fiat – including around 8,000 to be sold in Turkey by Tofas.
At the Bursa factory, MiniCargos roll down the same production line as the Lineas. The factory is very clean and modern – this is no low-cost assembly project. The welding line is highly robotised, and able to cope with a wide range of different vehicles. Fiat’s influence is clear – most of the robots are supplied by Comau, Fiat’s factory equipment-making subsidiary. There are three separate final assembly lines: one for Albea and Palio; one for Doblo and the new line for Linea and MiniCargo.
The Bursa plant currently has a capacity of 250,000 cars a year, and this is being expanded to 400,000 by 2010. It’s a big plant, covering 93 hectares, of which 34 hectares are buildings. The plant employs 5,300 staff, 700 of whom were added for the MiniCargo project. There is an in-house Tofas R&D department, which spent $127m last year.
For PSA, the Nemo and Bipper are the first PSA-brand vehicles produced in Turkey, and Michel is pleased to be there. “At PSA we saw a real interest in being interested with an industrial operation here to get an inside view of the country, and that has proved very fruitful.” Indeed, PSA has had a purchasing office in Istanbul for several years, and this is expected to source components worth €400m from Turkey by 2010.
The vans will go on sale in Italy and Turkey before the end of the year, and will reach the UK in the first quarter of 2008. PSA Peugeot Citroen president Christian Streiff wants van users to downsize to the MiniCargo. “This type of vehicle does not exist in Europe today,” he said. “In order to find right solution for city centres we needed to find something to replace vans that were becoming too big for life in the city”.
And the city is where you’ll be seeing a lot of these little vans in the future, especially in London. The diesel engines that power them have CO2 emissions below the crucial 120g level – which would earn them exemption from the congestion charge if current proposals are approved by London authorities. So delivery firms might be tempted to use larger numbers of these smaller, but greener vehicles in order to save the £8 a day levy.
Citroen president Gilles Michel said the Nemo would be Citroen’s entry model – so it will be cheaper than the Citroen Berlingo. And while the vans will be cheap, they’ll not be basic, Michel added. “Van drivers don’t want to find themselves in the world of 25 years ago – they want air conditioning, ABS, telematics, electronic functions – so you are getting that in this vehicle.”
Indeed, he doesn’t refer to it as a low-cost vehicle. “I associate that with a car for poor people or a car that has been stripped of all its equipment. That is not what we are doing. We have a very competitive van that has a low cost in terms of manufacturing cost. But it is modern, well equipped, and stylish. A vehicle of the 21st century, not of the 1990s,” he said – a barely veiled dig at the Renault Logan family, whose MCV version will compete directly with the MiniCargo.
The vans have a family resemblance to the larger Sevel vans, and this is “intentional”, Michel said. And while the three brands’ vans differ little, this is not such a problem, he believes. “Design is not critical for vans, but they need to be attractive. But design is not the driving element of choice. So the vehicles don’t need to be strongly different – functionalities, service, and dealer network are drivers. So Citroen can compete with vehicle that looks similar to Fiat and Peugeot.” Commercial activities including setting the price is outside the engineering and manufacturing agreement.
The fact that costs have been kept low means the MiniCargo can make money on relatively low volumes. Christian Streiff believes it will work. “It is a project for winning market share – a conquest model, with great potential in all of Europe including Eastern Europe,” he said.
Mark Bursa
See also: EMERGING MARKETS ANALYSIS: Fiat Linea takes the emerging markets car to a different level
TURKEY: Fiat, PSA CEOs gather for small van roll-out
Dave’s blog: Bursa in Bursa
