Fiat group CEO Sergio Marchionne intends to use the cash and freedom of action he got from the divorce from General Motors to pursue project alliances with a variety of partners.
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What is Marchionne looking for?
“Not another global alliance, which doesn’t work if it doesn’t quickly turn into a proper acquisition,” said Marchionne on his return from signing an agreement ending the link to GM.
Marchionne favours industrial cooperation on specific projects, similar to the pattern of PSA/Peugeot-Citroen. The French automaker already is Fiat Auto’s longest partner and also is a company known for project links.
Fiat and PSA begun cooperating on light commercial vehicles back in 1978.
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By GlobalDataThey extended their cooperation to large minivans in 1990 and are about to announce a third common project, a small commercial van to be jointly built at Tofas, in Turkey.
Fiat is also cooperating with Suzuki for a small SUV, which will debut early next year, built by Suzuki in Hungary.
But Fiat doesn’t have to rush into joint ventures. Fiat Auto already has the platforms and powertrains to renew its entire product line over the next five years – largely from shared platform and powertrain development with GM since 2000.
At the Geneva motor show next month, Alfa Romeo will launch the 159 sedan and Brera coupe, two of five new vehicles built on the ‘premium’ platform that Fiat co-developed with GM’s Saab. By spring 2006, Alfa will add a station wagon to the 159 sedan and a convertible variant of the Brera. The Kubang SUV due in 2007 is now based on the premium platform.
Maserati could also use the premium platform for the Kubang crossover and an entry-level convertible.
The Small Car Component System (SCCS) co-developed with GM’s Opel/Vauxhall is the basis for the third-generation Punto due in September. Fiat will then use the platform to replace the Palio world car family, Idea small MPV and Lancia Ypsilon and Musa.
Fiat will use the current Stilo platform for a replacement in late 2006 and a third-generation Lancia Delta a year later. A variant of this platform will be used to replace the Alfa 147.
On the engine side, Fiat can also wait to find new partners.
After regaining control of its powertrain activities, Fiat has the Fire four cylinder in-line petrol engine family, in displacements from 1.1 to 1.4 litres, plus agreements that GM Europe will supply larger petrol engines and GM’s Holden supplies, from Australia, the 3.2-litre Global petrol V6 for the new Alfas.
Fiat and GM co-own the 1.3-litre diesel MultiJet factory in Poland. Fiat again controls the Pratola Serra plant in Italy, which makes 1.9-litre I4 and 2.4-litre I5 turbodiesels. Later this year, Pratola Serra will add a 1.6-litre diesel derived from the 1.9-litre.
So Fiat Auto doesn’t need a partner immediately for most purposes. But executives in Turin knew back in March 2000 when they signed the deal with GM that Fiat Auto was too small to survive alone. When the GM pact was signed, Fiat was making 2.4 million units a year and losing €599 million. Last year, Fiat built 1.8 million units and lost €1.5 billion.
Where Fiat Auto does need a partner more immediately are areas in which, ironically, its strategic alliance with GM didn’t help: tiny, versatile city cars such as the Smart ForTwo and the lower-medium segment.
In the lower-medium segment, Fiat and GM couldn’t help each other because the life cycles of the Stilo and Opel/Vauxhall Astra did not align.
When the alliance was signed, Fiat was already in an advanced phase of Stilo development, introduced on an all-new platform in summer 2001. At the same time, Opel/Vauxhall decided to base a new Astra that debuted in spring 2004 on the platform of the previous generation.
The partners could not converge on a next-generation alignment. Fiat is planning a new Stilo for late 2006, while Opel/Vauxhall won’t replace the Astra before 2010.
For a possible city car positioned below the Fiat Panda, Europe’s best-selling minicar, Fiat has many design alternatives to the 3+1 concept unveiled in March 2004 at Geneva. But it has no sound business case yet.
DaimlerChrysler is considering how to reshape the future of its Smart minicar subsidiary. Fiat Auto and DaimlerChrysler have been close to a relationship before.
In 2000 when Fiat forged the strategic alliance with GM, it turned down a $US12 billion offer from DaimlerChrysler to buy 100% of Fiat Auto. DC wanted the Italian automaker’s expertise in minicars and front-wheel-drive technology.
Then, Fiat chose GM and DaimlerChrysler picked Mitsubishi Motors as a partner. Both alliances are freshly over. Fiat and Smart could now freely discuss specific industrial cooperation to share development costs and to improve economies of scale of their next minicar generations.
Automotive News Europe
