Alfa Romeo is enjoying sales success, Ferrari F1 team is
winning champions after champions, Lancia is improving steadily... all
sounds good news to Italian auto industry. However, the sky over Italy
is dark, just because of one reason - the FIAT empire is collapsing!
ago, FIAT sold 20% stakes to General Motors to get a stronger
partnership and cost sharing. This is the first sign that the Italian
giant is no longer as powerful as it used to be. In the mid-80s, 3 out
of 4 cars sold in Italy had the 4-stripe trademark on the grille.
Today, FIAT’s share of domestic market drops to around 1/3, and
worldwide sales is declining by 15% in the first quarter this year.
During the period, it made a loss of close to US$300 million and debt
is accumulated to $4 billion.
chairman Giovanni Agnelli, the hero of Italian industry, used to insist
the jewel of the crown, crown of the country, Ferrari, keep firmly in
Italian’s hands. In fact, when he accepted the plan that sold Fiat
Auto’s shares to GM, he split Ferrari from Fiat Auto (which consist of
Fiat, Lancia and Alfa) and reorganized it under the control of Fiat
SpA, keeping Ferrari (hence Maserati as well) away from the American.
However, the situation now is so poor that Agnelli has to agree with
the plan that float Ferrari on stock market. FIAT just need the
one-time cash to reduce its debt.
Ferrari will be shifted to foreigners’ hands is unknown. We hope not.
FIAT’s problems are unlikely to be solved so easy. The main problem
still lies in products. Punto, once the dominating force of FIAT’s
fortune, is facing strong competitions from many new superminis
launched last and this year. It is still some years from replacement
but is already showing its age. In fact, a couple of months ago FIAT
stopped its production lines at Melfi plant for a few weeks in order to
clear the stock of Punto.
even worse. Just launched a few months ago with high hope, FIAT is
already experiencing one of its biggest sales disappointment in years.
It proves that when a Fiat loses Latin taste it becomes nothing.
many more deep-rooted problems of its lineup, such as the reluctance of
launching a mass production Scenic-style MPV (the spaceframe Multipla
is a small-scale production), the delay of the Panda / Seciento
replacement, the lack of a big family car... all these are unlikely to
be solved soon, especially the company is now cutting budget thus will
delay future programs.
As you can
see, Fiat’s management made countless of mistakes in product planning.
Just cutting cost and slimming production will never solve the
problems. What it needs is some sensible products just like what Nissan
is introducing, or simply another Carlos Ghosn-style saviour. How about
Ferrari’s Di Montezemolo?