Fiat plans European revival, drops Punto

Hit by the financial crisis in Europe, Fiat S.p.A. has been struggling to maintain healthy sales charts. Apart from the slump in the economy, the lack of new models, coupled with a drastic drop in demand in its home country, Italy, has resulted in Fiat’s European market share collapsing from 9.3% in 2009 to 6.2% this year. In an attempt to get the company back on track, the management has decided to make certain changes to its policies and the positioning of its products.

Over the next three years, Fiat plans to spend $12 billion to develop new models for Europe. The move is expected to end the company’s European losses and revive its Italian factories. Most of Fiat’s 30,700 employees have been off work for more than five months this year.

Fiat will also stop production of the Punto hatchback. The car’s sales have been declining since 2007, before which it accounted for 31% of Fiat’s total European sales. The company has decided to replace the Punto with a 5-door version of the 500, which will be built in Poland. Fiat will also focus on bolstering the production and sales of the Panda, which will target customers with a lower budget.

Glorifying the "Made in Italy" concept is also on the cards. This will involve the introduction of many new models of Fiat's luxury brands, Alfa Romeo and Maserati. These will be manufactured in Italy, instead of any other country. A new product strategy for Alfa Romeo will be announced, which will aim to boost Alfa's global presence. Fiat will try to emulate the German model of "high prices to offset high wages", by building more expensive cars with higher margins.