We should know this year whether Fiat CEO Sergio Marchionne made the right choice when he delayed key new product launches until after auto markets started to recover from the worst crisis in decades.
Some have criticized Marchionne's decision because it has contributed to a drop in Fiat's 2010 European new-car sales that is three times worse than the market's overall decline. Others, however, have praised the CEO's stance, calling it strategically astute.
To counteract the global financial crisis, Marchionne put the brakes on any stoppable product investment at the end of 2008.
The move worked well in 2009, when governments in Europe's largest markets launched incentives that favored sales of minicars and subcompacts, Fiat's traditional strengths.
But when the subsidies ended in late 2009 and early 2010, Fiat's sales in Europe began a deep dive that is expected to worsen this year.
Marchionne's Draconian investment cuts included the station wagon version of the Fiat Bravo compact, a model originally due to launch last year. The cut was made even though wagons account for a quarter of all compact-car sales in Europe.
The move kept Fiat from challenging wagon variants from rivals such as the Ford Focus, Opel/Vauxhall Astra and Peugeot 308.
Marchionne also delayed the Lancia Ypsilon subcompact from spring 2009 to summer 2011. This severely weakened the brand as the Ypsilon accounts for almost 45 percent of Lancia's total sales.
But the most damaging move is likely to be pushing the launch of the Fiat Panda minicar to early 2012 from spring 2010.
The Panda is Europe's best selling minicar and No. 2 at Fiat to the Grande Punto subcompact.
It will be tough for the 8-year-old Panda to maintain its lead in a segment full of fresher rivals such as the all-new Volkswagen Up due in late 2011. VW's return to the segment will certainly cost all competitors some market share.
When explaining his decision to delay such important products, Marchionne said it makes no sense to launch new models in a falling market. He believes that the European market will start to recover in the second half of 2011, which is when Fiat will begin sales of the new Ypsilon and the Fiat Freemont (a rebadged Dodge Journey large SUV).
Competitors in Europe that did not heed Marchionne's warning have seen steady growth. Renault, for example, increased sales 4.9 percent to 1.28 million units from January to November, according to industry association ACEA.
Volkswagen launched the new-generation Polo in midst of the crisis and by mid-2010 it was Europe's best-selling subcompact and No. 2 in total European sales trailing only the VW Golf.
By September, Fiat's sales volume and market share could reveal whether Marchionne's decision was right or wrong. Until then, Fiat's dealers in Europe will face tough times. The big question is: Will Alfa, Fiat and Lancia customers who left the brands during the January 2009 – June 2011 new-product drought return? If they don't, the ripple effect from the product delays could affect the brands' new-car sales until the middle of the decade.