Fiat in Europe is facing uncertain future as sales drop
FCA thinks Fiat’s relevance has shrunk in Europe, time to focus on other brands that offer higher margins.
In spite of moving out of mass-market, Fiat is having hard time surviving in Europe out of lingering legacy issues. The brand is totally under-performing, with the sales of its premier model 500X dropping over 66 percent last year. FCA is likely to reorganize the brand around the 500 family in immediate future, leaving the latest Fiat Tipo 3-box models in limbo.
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At the Geneva Motor Show early this week, FCA CEO Sergio Marchionne, when asked on Fiat’s future in the continent, said:
“We can’t be emotional. I know Fiat has 100 years of heritage and so on, but the truth is that its relevance has shrunk. We’ve had to make space for other brands to grow, and that has taken a lot of resources. Building Jeep as an SUV brand in Europe has required investment and chasing the attractive margins that Alfa Romeo and Maserati could deliver has taken time and resources; these things have been our focus in Europe”
Interestingly, it is the Fiat 500 family that has saved the brand from folding. The 500, in particular, deserves strong applaud as the premium city car’s sales are consistently stronger, in spite of buyer preference moving towards compact SUVs. But, Fiat’s only compact SUV – the 500X – miserably failed to woo buyers lately. Fiat Panda is also exhibiting mediocre performance.
Asked on the future of Fiat Tipo, Marchionne is of the idea that the segment the Tipo models cater to is very crowded and therefore less profitable. “It may have been a part of the market where Fiat traditionally stood, but perhaps we need to move on. I can even see that Latin America could be more relevant than Europe for the brand” he added.
With the FCA Group to outline its 2018-22 strategy to its investors in the month of June, it is likely that the Fiat 500 derivative models may be strengthened in Europe to keep the boat afloat for now. But a concurrent plan may be executed to anchor the brand out of Europe, and focus on those regions where Fiat is growing.
Although the 500 platform is Fiat’s savior, it is the legacy of over-dependence that has now grown as liability. The retro car still has the good old charm, but it may not help the car to reclaim a new appeal in changing market preferences. This is exactly what has happened to VW Beetle and BMW Mini to some extent.
But with FCA questioning Fiat’s relevance in Europe, there is no possibility for a replacement platform or a new model family tailor-made to cater to the region.
Source: Autocar UK