Struggling Fiat to invest billions, go upmarket

THE Fiat Group will reportedly spend around 9 billion euros (A$13.6 billion) on a bullish new model strategy designed to reignite the flagging auto-maker in its European home market.

According to Bloomberg, two sources “familiar with the matter” have told the news publication that the Italian automotive heavyweight aims to end its losses in Europe within three years and revive its nearly empty Italian factories with a push upmarket and a renewed model portfolio.

However, the product push could spell the end of one of Fiat's longest-running nameplates, with speculation that the Punto light car could get the chop as the Italian brand aims for a more premium buyers.

Possible new models that could form part of the move away from cheap and cheerful budget offerings include a number of new 500 variants, an Alfa Romeo 4C convertible and Giulia mid-size sedan, and more Jeep SUVs.

The quirky Panda light-car will remain in Fiat's line-up and the company will focus on bolstering its premium brands with new 'Made in Italy' models from Alfa Romeo and Maserati.

Maserati has already launched the BMW 5 Series-rivalling Ghibli sedan in some international markets and, as reported by GoAuto, will introduce its first SUV - to be called Levante - in 2015.

The report suggests that the Punto, which has been on sale in its current iteration since 2005, will be replaced by a five-door version of the 500 to be built in Poland to save on production costs.

Fiat's market share in Europe has dropped significantly in recent years, with overall group sales down 47 per cent compared to 2009. The company's European market share is also down from 9.3 per cent in 2009 to 6.2 per cent this year.

The sales downturn has seen Fiat record operating losses of 2 billion euro since 2011, with a 304 million euro loss in the first nine months of this year.

Fiat Group CEO Sergio Marchionne said in October that the company would do everything it could to avoid cutting capacity further at its existing manufacturing plants.

“We will utilize what we have in defense of what we have,” he said. “We will not be shutting down plants. We will shift our production capacity in accordance with our premium brand strategy.” The report says that around 30,700 Italian production staff have been placed on leave this year, with most of those being off work for five months. The plan would see a return of some staff to the Mirafiori plant when production of the Maserati Levante kicks off in 2015.

Italy's manufacturing union is supportive of Fiat's move upmarket, with the head of the FIOM (Federazione Impiegati Operai Metallurgici) Federico Bellono saying going upscale “is the right choice and should be supported”.

The leaked report comes two months after Fiat's planned buyout of Chrysler was put on hold after talks between the Italian car-maker and the United Auto Workers union - which owns the remaining 41.5 per cent of Chrysler - broke down because of a dispute over the US$5 billion asking price.