Fiat's revival in the U.S. -- as well as its operations in Italy -- could depend on the reception Americans give to the Alfa Romeo 4C.
Despite a slow start, Fiat is still betting it can stage a successful return to the U.S. market – or else, warns CEO Sergio Marchionne. The alternative would force the closure of two of the maker’s Italian assembly plants.
The good news for Fiat is that most of its plants outside Europe – and those operated by its American partner Chrysler – are operating at full speed struggling to keep up with demand as the global economy recovers. The problem is Europe, where a weak economy has depressed the automotive market and the only way to justify keeping Fiat’s five remaining plants in Italy open is to build up exports.
But demand in the U.S. for the maker’s little Fiat 500 sedan barely reached half the initial 50,000-unit target last year and, during a media roundtable last month, Marchionne said he doesn’t expect to see it push much higher than 30,000 in North American this year. But some analysts think even that will be a stretch and warn Fiat’s attempt to rebuild its U.S. distribution network will fail.
That could result a big cutback in Italy where Fiat has long complained its plant are not competitive. “We have everything we need to seize the opportunity of working in a competitive fashion for the United States too. But if this were not to happen we would have to withdraw from two of the five operative sites,” Marchionne told the Italian newspaper Corriere della Sera.
The maker shuttered the highly-inefficient Termini Imerese plant in Sicily, last year, and has been threatening to make additional cuts – even with a successful U.S. revival – if it doesn’t get further concessions from Italian employees.
The re-launch of the Fiat brand has been hampered by product delays, notably at the Alfa Romeo brand. The original plan was to have American dealers handle both marques but Marchionne postponed the revival of Alfa feeling its European product line wasn’t ready for the American marketplace.
There have been repeated rumors out of Europe that Fiat might sell Alfa to rival Volkswagen AG, but Marchionne last week stressed it is not for sale, insisting “We need Alfa in the States.”
That said, it’s unclear when Alfa will be added to the U.S. showroom but a new version of the Alfa Giulia, as well as a sports car dubbed the 4C, are due around 2014. But that’s a lifetime in automotive terms, and dealers have complained it will be difficult for them to maintain their operations based on Fiat alone over the next several years, especially with that brand’s sales running barely half its original forecast.
“It seems worrying to me. He’s telling us that there are two Italian plants at risk if the recession continues and if his plans do not materialize,” Giorgio Airaudo, Fiom’s national secretary for the car sector, told the Reuters news service.
At this point, some observers speculate, Fiat might even consider producing versions of Alfa products bound for the U.S. outside of Italy.
Fiat now holds a roughly 58% stake in Chrysler as a result of stepping in to help the U.S. maker emerge from its 2009 bankruptcy. Having posted a strong financial turnaround last year, Chrysler generated three-quarters of the Fiat-Chrysler alliance’s total fourth-quarter operating profit. The maker’s Italian brands loss nearly $20 million.