Sergio Marchionne has made it clear that there is to be no gambling with production capacity at Fiat Auto, writes Rob Golding.
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He has a target to build 2.8 million cars by 2010 but that does not involve any capex in new capacity.
“There is no intention to expand capacity except with TATA in India. When we talk about full capacity it means running flat out with what we have got.”
The forecasts for volumes for the new Fiat 500 and for Bravo are 120,000 a year each. Fiat needs to complete its launches for Bravo in each market before “turning on the taps.”
Fiat 500 is such a new concept that there is very little guidance on the quantity that the markets can absorb at present.
There are no plans to build new factories but there will be plans to de-bottleneck existing ones. Marchionne revealed that they were constructing feasibility studies to discover how they can improve plant capacities if demand justifies it. Building new factories will come much later.
“We are looking at the possibilities from an engineering point of view. It is too early to turn on the taps. All the new models need to be able to generate a return.”
Marchionne has also disclosed that there is no more red ink in Fiat Auto in Europe. “Passenger car is profitable,” he confirmed in answer to an inquiring analyst.
It is another milestone in the remarkable rehabilitation of Fiat.
Rob Golding
See also: ITALY: Fiat net income doubled in Q1
