Fiat moved into the red in Q1 2001 and needs a big drive in new model launches to increase market share. The new model range looks like it stands a good chance of attracting customers; at the same time, Fiat's relationship with GM should help it recover. The only problem is that many other automakers are now following similar strategies. They can't all win.
Fiat Auto, the Italian automaker, announced in Milan its intention to invest E14 billion over the next four years in 19 new models throughout the world. Like most vehicle manufacturers, Fiat has also suffered at the hands of the markets. CEO Roberto Testore commented that the company's aggressive plan comes as it looks to recover its position after recent problems in South America, Poland and Turkey. Combined with weaker European demand, these forced Fiat Auto into the red in the first quarter of this year.
Fiat hopes its planned new model launches will propel it back into the fast lane, starting with the mid-sized Stilo, which replaces the Bravo/Brava range. While intense competition means that the cars will have to be highly attractive to win sales, Fiat stands a good chance of success. It seems to be getting a product mix that is an attractive proposition for motorists; its experience in rejuvenating Alfa Romeo will prove helpful in designing and building desirable cars. To aid the new model launches, Fiat Auto will spend E550 million in marketing and promotional activity.
At the same time, the vehicle manufacturer's relationship with GM is bearing fruit: the sharing of purchasing, amongst other things, has already helped cut costs. In the future, platform sharing will increase production and development savings even further.
The cost-cutting and range-broadening strategy looks like a good move. But with many of the automakers outlining similar strategies, a question mark still remains. For sure, excess capacity will continue to drown the fortunes of some players. Vehicle manufacturers first need to ensure that they create attractive products and then manage their marque as well as brands to full effect.