Fiat celebrates its 116-year anniversary on July 11. Happy birthday, Fiat. Glad we knew you. You've had a good run dating back to 1899 when Giovanni Agnelli and his co-investors founded the Italian Automobile Factory of Turin or Fabbrica Italiana Automobili Torino (F.I.A.T.).
Okay, if we're going to be specific and literal, we are in truth saying arrivederci to the Fiat car brand, not goodbye. We will see Fiat again, but reinvented and diminished. What Fiat Chrysler Automobiles (FCA) has planned for Fiat-branded cars boils down to "shrink and largely disappear." We heard as much from Sergio Marchionne earlier this year at the Geneva car show.
"Fiat no longer intends to offer a full range of products like other mass brands," said the CEO of FCA. "There are two reasons – the economics are not there to develop these cars and the FCA portfolio takes their place."
We often don't hear the eulogy for a car company before it dies, but there it is. Fiat as a mass-market brand is a rolling corpse with a great history. True, the historical record was a bit blackened by the Agnelli family's ties to Mussolini. But, by the early 1960s, the family was back in charge and remains so today. Exor, the Agnelli family holding company, controls nearly 50 per cent of the voting power at Dutch-registered FCA, says Reuters.
Fiat's postwar story of rebirth and growth is spellbinding. By 1970, Fiat was a colossus employing 100,000 people to build 1.4 million vehicles in Italy alone, says just-auto.com. In the 1950s, the Fiat 500 and 600 were legitimate rivals to the Volkswagen Beetle. Fiat became an automotive force and the largest brand in Europe. Fiat cars and trucks were everywhere, worldwide.
This was when Fiat the corporation also binged on other car brands. Lancia was acquired in 1968, Ferrari in 1969, Alfa Romeo in 1986, Maserati in 1993 and, finally, Fiat swallowed Chrysler in 2014. Dodge, Jeep, Ram – the lot – became part of Fiat. That turned into FCA, which now believes that the Chrysler Group side of its portfolio has the best mass-market growth opportunities. Particularly Jeep.
There's truth there. FCA sold almost as many Jeeps last year as Fiat cars (1.2 million). Jeep has appeal in China, the world's largest auto market, and FCA earns billions on Ram trucks. Fiat, meantime, builds most of its production in high-cost Italy and struggles to compete against the Volkswagen Group in Europe. Fiat is strong in struggling South America, which is not good at all.
Even Canadians can't be convinced to dance with Fiat. Through the first quarter of this year, Fiat sales in Canada were down 46.3 per cent, according to DesRosiers Automotive Consultants. The Fiat 500 may be cute, but few Canadians care.
That may change. A new version of the 500 is on the way and, next year, a new Fiat 124 Spider roadster is due. The 124 is a rebranded version of the Mazda MX-5 now being launched. Some markets will see a new Punto and a few other small, low-cost Fiats. But it's safe to say that Fiat as a brand the equal of say, Volkswagen, is finished.
Marchionne and his team at FCA have decided instead to put money into growing the Alfa Romeo brand, pitching new Alfas such as the Giulia just unveiled in Italy. The Giulia is intended to be a BMW 3-Series fighter – rear-drive, light, modern and sporty. Alfa will get eight new models over the next three years, the product of a $6.9-billion investment in the 105-year-old Alfa brand.
You can see what's going on here. FCA is pushing massive resources into its slightly younger Italian brand, hoping for the high-profit sales that BMW, Mercedes and Audi enjoy. The goal is to juice Alfa sales six-fold. By 2018, Alfa wants to be selling 400,000 cars that compete with BMW, Mercedes and Audi. So the global relaunch of Alfa is making a loser of the Fiat brand.
This is the unsentimental way of the car business. Happy birthday, Fiat.
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