Fiat and the Italian Trademark

The Turin auto manufacturer intends to implement an outright leap in productivity. From the separation into two companies to the reorganization of production, the main changes

Fiat and the Italian Trademark By Alberto Ferrucci

By Alberto Ferrucci
Published on on 26/04/2010

The fact that Fiat is separating into two distinct public limited companies - the auto sector and the sector of large transporters, agricultural machines and the like - can be useful for various alliances in the two branches. In the case of autos, the partnership has already been decided on with Chrysler, with Marchionne as administrator of the due companies. The only problem is how they will divide the debt. Both will be immediately held responsible for it by agreement, but when the decision is made on how to do so, it will influence the value of the two companies' shares, which will remain in the hands of the current shareholders.

From the announcement of the deal until 2014, it seems as if the production of luxury cars will be reinforced, offering more profit. Building these prestigious models does not cost much more than building an economy car, but they can be sold for much more, as the choice is not only one of price but of the image factor. It seems that this production will be focused at the main headquarters in Mirfiori, while economy cars like the Panda will be produced in Pomigliano D'Arco (Naples). It all depends on reaching an agreement over more intense use of the companies' production plants - something not possible under the current trade union agreements. In fact, reaching a specific agreement is one of Fiat's conditions for sticking to this plan and not adopting "Plan B", which would aim at increasing production abroad.

That there will be a true production leap to bring about is apparent. The less productive plant in Termini Imerese, Sicily, will be closed, while production in the rest of Italy will be doubled. Fiat's message is clear this time: no more state subsidies, even if indirect (it and other car manufacturers had already received them last year thanks to demolitions). Rather, it's focusing on greater efficiency, without it being accompanied by expectations of trade unions to share the benefits. Fiat Auto, which still includes Ferrari, Maserati and Alfa Romeo, intends to propose itself in the large emerging markets of prestigious autos - India and China - with all the prestige of the Italian trademark. That prestige has previously been built from a high level car, built in the company's best Italian factories and also in the USA, but this time it will turn to small and low-consumption cars, produced in Italy. It's an image operation that we hope will work. It's not clear how much Fiat has considered environmental and consumption needs in this project - seeing future scarcity of petroleum and the need to reduce environmental impact - which will count in Asia even more than it does in the West.

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