TURIN – After a 15-month spending freeze that delayed the launches of key models, Fiat S.p.A. will boost investment in new products this year.
Fiat CEO Sergio Marchionne's investment freeze from October 2008 to December 2009 following the collapse of the global financial markets delayed the launch of the Fiat Panda successor and replacements for the Alfa Romeo 147 and Lancia Ypsilon.
Last week, Marchionne said Fiat will return to normal investment levels this year to benefit from an expected European market recovery in 2011.
In a telephone conference with financial analysts on Jan. 25, Marchionne defended the freeze, saying that launching key models in 2010 would be "a waste" because of the uncertain market.
"That's the reason why I think we intelligently postponed a number of our programs to make sure that it coincided with what I consider to be a structural recovery in demand in 2011 and later years," Marchionne said.
Fiat plans to invest about 4.5 billion euros this year, up from 3.38 billion euros last year. Fiat cut investment by almost 32 percent in 2009 from 4.97 billion in 2008.
Fiat expects the total Western European market to fall to 12 million units from 13.6 million last year if scrapping incentives are renewed in Italy. With no Italian scrappage renewal, Fiat expects the market to shrink to 11.5 million.
Fiat's investment freeze hit these models:
• Alfa Romeo Giulietta. The car was due to replace Alfa 147 in March 2009. The Giulietta will now go on sale shortly after its debut at the Geneva auto show on March 2.
• Lancia Ypsilon. An Ypsilon replacement will launch in summer 2011, two years later than originally planned.
• Fiat Panda. The third generation of Europe's best-selling minicar will come to market in 2011, two years later than planned.
Fiat's investment freeze means that the automaker is only launching two models in Europe this year. These are a new Fiat Doblo car-derived van and a still unnamed rebadged version of the Dodge Nitro compact SUV. Fiat owns 20 percent of Dodge parent, Chrysler Group.
In 2011, Fiat brand will introduce a rebadged Dodge Journey crossover to replace its slow-selling Ulysse large minivan as well as a five-seat minivan to replace the Idea and a seven-seat variant to replace the six-seat Multipla.
Next year Lancia will expand its range with four models from Chrysler:
• The Phedra minivan will be replaced by a restyled Chrysler Voyager large minivan, which is sold as the Town & Country in the U.S.
• The brand's discontinued Thesis flagship will be succeeded by a large sedan based on the Chrysler 300C.
• Lancia will get a heavily revised versions of the Sebring sedan and cabriolet.
Marchionne, who is also Chrysler CEO, still has not decided how the Chrysler and Lancia brands will be used to badge their shared product portfolio across Europe.
Most likely, Lancia could survive only in Italy, with Chrysler used in the rest of Europe.
In 2008, Lancia had global sales of 103,000 cars of which 93,000 were sold in Italy. Chrysler brand sold 29,000 cars in Europe in 2008.