FCA Revamps Factories

There has been a lot of speculation in the automotive industry about what the major groups are going to do with respect to production plans. We have seen both Ford and General Motors pull back from assembling passenger cars in the US in favour of higher profit margins on trucks and SUVs. There have also been reports about Toyota doing a similar thing where they have started to trim the product ranges to reduce the amount of vehicles being assembled across the world.

FIAT Chrysler (FCA) have also been in the news a fair bit this year with regards to what they are going to do. Earlier in the year, there were reports that all FIAT branded vehicles would be built outside of Italy and they would close those factories. With the passing of their CEO, Sergio Marchionne mid year, those plans were reconsidered. This is what we now know of the strategy:

FIAT doesn’t make a huge variety of passenger cars anymore, with the 500, Punto and Panda models made in Italy and at the low end of the sales market. The 124 is made in Japan thanks to it being based on the new Mazda MX5 and there are several commercial vehicles built in Turkey. The company has announced a major investment plan for Italy with 13 new or redesigned vehicles coming out of the local factories. $5.7 billion is earmarked to be spent over three years in the country.

Like the US, Europe and the rest of the world is enamoured with compact SUVs, so as the Jeep brand drops some of their older models, Alfa Romeo and Maserati are developing models further up the price scale. The investment in the factories will enable these new models to be assembled in Italy. Alfa Romeo has the Stelvio and Maserati has the Levante, however both marques will release new models to fill in the gaps in their line-ups. Alfa Romeo will build a compact model and Maserati will build a bigger version of the Levante and then a similar sized SUV – with a new name – to its current model.

In addition, we know that both FIAT and Maserati are committed to an electric future with new models due out in the 2020s to satisfy the assumed demand. In addition, Jeep will have another model built in Italy to expand that marque in Europe.

There has also been talk of a new factory in the US to build more Jeep branded models. They are about to launch a new pickup truck and several other new models are being considered. The Jeep marque has been the core of all of the groups that have owned it over the past sixty-odd years. It has consistently sold well and provided buyers with exactly what they wanted. FCA apparently have an idle engine plant in Detroit that is the focus for this new assembly plant. Clearly Detroit has the skilled labour workforce and will have more if General Motors really do spit out several thousand workers!

In addition, like its US rivals, FCA has increased production of its trucks under the Dodge and Ram brands to satisfy demand from North America. One factory stopped making Chrysler sedans to focus on truck assembly. Another one was making a Ram truck that was discontinued and so it retooled to assemble the new Jeep Wagoneers. Other factories have been retooled to build the Jeep Wrangler, again to satisfy the increasing demand for this ever-popular model.

FCA is a little lopsided in revenues thanks mostly to the Jeep and Ram brands delivering profits in the US whilst the European brands struggle to achieve the same outcomes. With new management on board and a reshuffling of the deck chairs, we might see an improved outlook for Europe, however they will be affected by internal European politics just as the US is being affected by the impact of trade tariffs. They are not safe yet – and we know that no European Government has the funds to bail them out if the proverbial hits the fan.