TURIN -SpA deserves this year's title of "Most Speculated About" car company.
So far, the Italian automaker has been rumored to be on the verge of a merger/alliance/joint venture with AB Volvo,Motor Co., Mitsubishi Motors Corp., Corp., Motor Co. Ltd., DaimlerChrysler AG and Yugoslavia's Zastava, among several others.
Some even say General Electric will buy a share of.
But while industry insiders speculate about who will eventually own the company, the world's sixth largest automaker, Fiat executives are busy devising a survival strategy for the highly competitive global automotive arena.
What the plan apparently will not include is the sale of the company, at least not any time soon. Fiat officially denies it is up for grabs, and other automakers have confirmed this. Juergen Hubbert, DaimlerChrysler AG board member in charge of automotive operations, recently told a German publication that DC was interested in Fiat, but no deal was likely. Fiat's owners don't even want to sell yet, he is quoted as saying. DC Co-Chairman Robertconfirms this, saying there are no discussions under way with Fiat.
Fiat executives instead say they are looking toward the new millennium and the automaker's second century, with plans to completely transform the company.
The new, flexible Fiat will be balanced - operating globally, creating value, meeting the needs of customers with new products and new services, and grabbing growth opportunities, says Paolo Cantarella, chief executive officer of Fiat SpA, on the occasion of the company's 100-year gala celebration and the launch of its new Punto.
"The transformation we are undertaking is both extensive and profound," he says.
Fiat is moving away from being exclusively an automaker, concentrating more on core businesses in industrial and service sectors, portfolio management, globalization and the business of lengthening the value chain. The process is nearly complete, Mr. Cantarella says.
"We have focused on our fundamental skills," he says. "They are skills - in design, engineering, manufacturing and marketing - that are common to practically all our activities."
Fiat recently strengthened its presence in several areas outside automaking and, in the process, has quickly grown from a relatively small player to a leader in several industries.
The company's purchase of Case Corp., coupled with its New Holland subsidiary, for example, makes Fiat No.1 in farm machinery, while a new joint venture between Fiat-owned Magneti Marelli and RobertCorp. will help it become one of the largest players in lighting technologies.
Fiat also has invested in the manufacturing of metallurgical products, and says it is the top manufacturer in that sector for the auto industry. Additionally, with three acquisitions in product systems, Fiat says it now leads the auto industry in manufacturing technologies. "We're focused in our business and we're strengthening our business," Mr. Cantarella says.
The company is not moving completely away from its automaking roots. Vehicle production will remain Fiat's heart and soul, officials say.
But where and how the Italian automaker builds cars will change.
Fiat has to meet the challenges of diverse customer demands with a leaner, more rational and more flexible company, Roberto Testore, chief executive of Fiat Auto, admits.
"We're going to have to learn to react to complexity with simplicity," he says.
Fiat faces three challenges. The first is supplying an open-ended product with standardized parts, giving the buyer a customized car that is built with subsystems to cut costs.
The automaker is working with its suppliers to design the modules, which will help Fiat become more flexible. It also is looking at outsourcing to save money.
Already this year, Fiat said it would design a small sport/utility vehicle (SUV) with. Based on the Japanese auto-maker's Pajero Pinin, the SUV will enter production in 2001 at Industrie Pininfarina SpA in Italy. Fiat plans to sell about 30,000 of the vehicles each year. Mitsubishi will supply the vehicle's chassis and 4-wheel-drive system.
The second challenge, Mr. Testore says, is service to customers. Fiat is not just a carmaker. It also provides financing, insurance and servicing. The automaker is working to deliver the same quality and capacity to customers all over the world, he says.
Fiat's third challenge is the most important, in Mr. Testore's eyes, and that is to continue to turn Fiat into a global company. "To create for the whole world, we have to create products that can be applied to each market," he says.
Long-term projects in emerging markets, such as South America, Eastern Europe, Turkey and Morocco, have pushed the company to think of these countries as domestic markets, he says. But global does not include the U.S. for now. Fiat continues to say it will sell only its Ferrari and soon its Maserati vehicles in North America.
Still, Fiat continues to look further. A joint venture in China and an assembly project in Egypt are among its latest global moves.
Most recently, Fiat andannounced they would team up to look at the possibility of jointly building engines in India. The two automakers are considering using Fiat's plant in Kurla, Mumbai, India, for production.
But Fiat intends to continue winning sales in established markets, such as Western Europe, and add sales in emerging markets, such as South America and Asia. Some 19 new models are planned between 1998 and 2002, with the new Punto the sixth vehicle launched so far. After 2002, the automaker will introduce four new vehicles per year.
To gear up for these challenges, Fiat is investing $10.5 billion between 1998 and 2002. Some 20% of that investment will be used for international projects.
"We expect ahead of us years of great vitality," Mr. Testore says.
Those years may be far into the future depending on who is doing the talking. Fiat's auto division, which accounts for more than half of Fiat's sales, has seen losses for the past four quarters, convincing executives that the parent group's net profit for 1999 will show little improvement over 1998's $644 million. Furthermore, the auto unit lost $155.8 million during the second quarter of this year compared to $46.3 million profit a year earlier. Fiat blames the loss on poor sales in Brazil and price cutting in Europe.
While analysts are skeptical, the division is expecting a return to health during the last quarter.
What's Fiat's secret weapon?
The automaker hopes its new Punto will be the key to winning a significant share of the 2.2 million to 2.3 million total vehicle sales in Italy and 14 million sales in Western Europe this year.
That's a lot riding on this "centenary" car, as the company calls it. But the B-segment is one of the most important in Europe and to Fiat. Total global production in this segment is expected to hit 8.3 million in 2004, up from this year's anticipated 7.2 million.
Fiat has sold more than 20 million cars in this segment during its 100-year history. "Millions of motorists have found that Fiat compacts provided them with features and solutions typical of higher segment cars," Mr. Testore says.
The Punto also is the first Fiat to wear the company's new badge. An updated version of the 1920s logo, the new badge is a circular shield with a band of laurels around a blue field, and features the Fiat name in silver. All Fiat models will follow the Punto in adopting it.
"The new Punto really does contain all the equipment, all the innovations, you could ask of any car in any category," Mr. Cantarella says. "This, then, is the car that launches Fiat into the new millennium."