May 28, 2023

Fiat’s Plan to Go Upscale Is Met With Skepticism

Instead of closing factories that are operating at less than half of capacity and throwing thousands of people out of work, Fiat will attempt to do what BMW and Mercedes have done in Germany. It will make Italy a production center for the company’s pricier brands, like Alfa Romeo and Maserati, which Fiat will then try to export to the United States and fast-growing markets in Asia.

The ambitious plan has been received skeptically by analysts who doubt whether Alfa Romeo can play in the same league as the German brands — each of which sells more than four times as many cars in Europe and already have strong positions in America and China.

“Alfa has too little volume,” said Ferdinand Dudenhöffer, a professor at the University of Duisburg-Essen in Germany who generally admires Mr. Marchionne.

Even in Italy, where Fiat is the largest private-sector employer, Mr. Marchionne’s vow not to close plants won only muted praise. Many in the country complain that he has not kept past promises to invest in new Fiat brand cars.

“Fiat’s words are good, fair and realistic,” Roberto Cota, the president of the Piedmont region, told the news agency Ansa. “But as president of the region I await facts.”

What is more, any good will generated by Mr. Marchionne’s show of commitment to Italian jobs was overshadowed by a decision this week to fire 19 workers at a factory in Naples. That came after a court ordered the company to rehire 19 others who had been dismissed, ruling in favor of their claims of discrimination.

If the firings seemed vindictive to the company’s critics, Fiat said in a statement that it had “no alternative but to employ the necessary mechanisms to reduce the company’s existing work force by the same number.”

During a week in which Ford and General Motors reported another quarter of huge losses in Europe, Mr. Marchionne illustrated just how different the crisis on the Continent is playing out compared with the one on the other side of the Atlantic in 2009.

European automakers cannot count on U.S.-style bailouts from strapped governments. And even if countries did try to prop up their national champions, they would probably run afoul of European Union rules.

In Europe, the government role usually consists of trying to prevent car companies from cutting jobs, even in response to huge financial losses. Calls by Mr. Marchionne for a coordinated, industrywide reduction of factory capacity have not led to any action. So the carmakers are left to fight among themselves for higher shares of a shrinking market — a competition that not all can win.

“The market is going to be a lot tougher than people think,” Mr. Marchionne said during a conference call with analysts Tuesday. “This is truly not for the fainthearted.”

Not that the car business is immune to politics in the United States, where Mr. Marchionne has been drawn into the fray. The Republican presidential candidate, Mitt Romney, has been running television commercials contending that President Barack Obama “sold Chrysler to Italians.”

In fact, many analysts credit Mr. Marchionne — who grew up partly in Canada and has dual Canadian and Italian citizenship — with rescuing Chrysler from oblivion. The rescue saved the jobs of more than 55,000 company employees, mostly in the United States and Canada.

“If it wasn’t for Marchionne Chrysler wouldn’t be around,” said Paul Nieuwenhuis, a director of the Center for Automotive Industry Research at Cardiff University in Wales.

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