* Italian revival plan aims to transform ageing model
* Maserati and Alfa Romeo the focus of revival plan
* To unveil cabriolet version of Alfa Romeo 4C coupe at
Geneva car show
* Hopes to tap overseas demand to offset weak core markets
* Unions doubt promise to save all Italian sites, re-instate
By Agnieszka Flak and Laurence Frost
MILAN/PARIS, March 3 Idle plants, surly unions
and a weak, ageing model line-up - the challenges facing Fiat
Chrysler's Italian revival sound a lot like the British
car industry's low point in 1982.
CEO Sergio Marchionne will be hoping the similarities don't
end there as he orders up sporty new Alfa Romeos and sleek
Maseratis in a bid to repeat in Italy what British brands like
Mini and Jaguar have since achieved under foreign ownership.
After cementing its marriage to Chrysler in January, which
will move the group's domicile and main share listing abroad,
Fiat is turning back to long-delayed plans to relaunch its Alfa
and Maserati marques, with which it has pledged to revive
The Geneva car show may offer early clues this week as the
company wheels out a cabriolet version of the recently launched
Alfa Romeo 4C coupe, along with the first Italian-made Jeep.
Marchionne said recently that Fiat plants have a bright
future making "premium segment, high-quality products with
reduced competition, more attentive customers and higher
Like the British auto industry, which now exports 80 percent
of its car production, Fiat aims to tap overseas demand.
That could soften the fallout from a six-year meltdown in
Fiat's core southern European markets, where a nascent recovery
promises to be slow.
But Marchionne faces hurdles including a big investment
outlay, difficult Italian business climate and heavy
unionisation among the workforce of 62,000.
"For a premium brand you need a broad offering of cars, but
that's very expensive and takes time," said Commerzbank analyst
Sascha Gommel. "I'm not sure Fiat can deliver that."
BMW's Mini and Tata Motors-owned Jaguar
Land Rover have become cash machines for their parents, helping
to propel British car production to a six-year high in 2013,
including half a million Nissans made in Sunderland,
Carmakers announced 2.5 billion pounds ($4.2 billion) of UK
investment last year as national output rose to 1.59 million
light vehicles, narrowing the gap with France, Europe's No.3
manufacturer after Germany and Spain. Italian output was below
630,000 vehicles, less than half its total a decade earlier.
To halt European losses by 2016, Marchionne is counting on
104-year-old Alfa to combine higher pricing than the mass-market
Fiat brand with heavier sales volumes than Maserati.
Marchionne has pledged to unveil a new strategy in May -
expected to include tough goals for an array of new Maseratis
and Alfas built at plants like Cassino, south of Rome.
The 4C coupe is off to a decent start; 1,200 European orders
since sales opened in December, with the U.S. launch yet to
come. The BBC's Top Gear show called it a "fantastic little
Maserati's vital statistics are also encouraging: trading
profit tripled last year as deliveries more than doubled to
15,400 cars - though still far short of a 50,000 target for
Neither brand needs the restoration job that brought Mini
and Jaguar back from nationalisation and near-death after UK
auto production bottomed out below 900,000 vehicles in 1982.
But Fiat will still have to invest many more billions to
revive Alfa, turn Maserati into a higher-volume marque and boost
the global renown of both brands.
"I just wonder if it has the money to really drive a strong
interior build-out of Maserati and Alfa," said Arndt
Ellinghorst, a London-based analyst at ISI Group.
The group has almost 20 billion euros of cash, but 30
billion in debt. While the tie-up deepened Fiat's pockets,
Chrysler needs a costly makeover of its own to keep up with
General Motors and Ford, Ellinghorst said.
Underlining the strain, Moody's last week cut Fiat's debt
rating to four notches below investment grade.
Several promised revivals have stalled since Fiat bought
Alfa in 1986, leaving behind a weak reputation for quality and
just three models, including the 4C. With about 100,000 annual
sales, the brand is dwarfed by Audi's 1.57 million deliveries
last year, a gap many doubt it can narrow significantly.
NOTHING ON THE TABLE
Italy's business environment is another challenge - ranked
by a World Bank survey as 65th out of 189 economies for ease of
doing business, compared with Britain's 10th place - and its
cash-strapped public coffers are unlikely to help.
"The government has nothing to put on the table," said
Fabiano Schivardi, an economist at Rome's LUISS University.
Marchionne's plan is seen as "the only chance" for an Italian
auto renaissance, he added.
Senior Nissan executive Andy Palmer credits consistent UK
government support, financial aid and 1980s labour reforms for
the company's repeated decisions to build new vehicles in the
"Grant aid tips the balance," he said. "It registers a clear
government interest in having a particular car there."
Palmer, who sits on Nissan's executive committee as chief
planning officer, believes the British revival is also owed to
Japanese management and competitive benchmarking at Nissan,
Toyota and Honda plants.
While Fiat Chrysler has some lower-cost production
experience in China, he added, "I'd question whether they have
access to what we would call lean manufacturing."
Even if Alfa and Maserati exports take off as hoped, they
will fill just a fraction of spare capacity at Italian plants,
which last year built less than one-third of their 1.87 million
vehicle maximum output, according to IHS Automotive data.
Marchionne has promised to save all Italian sites and
reinstate thousands of workers on state-backed temporary lay-off
schemes, but union officials do not believe he can.
"There's no way the premium strategy can fill all the
manufacturing capacity in Italy," said Federico Bellono, general
secretary of the Fiom union's Turin branch.
What happens next may depend on whether new Prime Minister
Matteo Renzi makes good on reform pledges, cutting labour costs
and red tape to emulate recent French and Spanish moves towards
And if Marchionne can convince politicians and workers that
his plan leads to eventual recovery and job creation, it may
help win acceptance for short-term sacrifices.
Gianluca Spina, dean of Milan Polytechnic's MIP business
school, believes the new Alfas and Maseratis can succeed with
the right balance of Italian glamour, design and performance.
"Being successful in the premium segment doesn't mean having
to beat the Germans on volume," Spina said. "If they make
beautiful cars that sell, then they have a shot."