Blog: Dave LeggettFiat Auto

Dave Leggett | 15 February 2005

The GM kiss-off cash will be welcome, of course. But you have to wonder whether it just postpones crunch-time for Fiat Auto. Look at the fundamentals: successful product is mainly concentrated at the low-margin small car end; it discounts heavily, because it has to to maintain volume; there's no huge allied moneyspinner activity (eg profitable credit arms, see Ford and GM) and Fiat generally has a poor reputation in the field of aftersales - in terms of both customer perceptions and ability to make money. The group's luxury brands - Alfa Romeo and Lancia - continue to experience mixed fortunes (Ferrari/Maserati is part of Fiat Group, but outside Fiat Auto).

And it is hard to see any great potential for further manufacturing cost-cutting on top of what has already been announced - essentially restructuring the plant-model mix in Italy to get better plant specialisation.

The market in Europe is getting increasingly crowded and it is very hard to see Fiat maintaining market share in Italy in the long-run. Can overseas sales take up the slack? There's a spread of sales around the world - South America, Eastern Europe, some Asia - but the international contribution, outside western Europe, to Fiat Auto revenue is not large. The GM cash buys some breathing space perhaps, but Fiat Auto is far from being out of the woods. Indeed, there's a sizeable body of opinion out there saying that it is now too far gone and cannot get out of the woods anyway.


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