FCA Develops Plan for Challenging European Market

AUBURN HILLS, MI – Fiat Chrysler Automobiles has developed a comprehensive plan to deal with a down European vehicle market, says the automaker’s chief operating officer for Europe, Middle East and Africa.

The European market suffered a downturn during the global economic recession and has been slower to rebound compared with other regions of the world, says Alfredo Altavilla. Some markets, including the U.K and Germany, have shown recent improvement, but Fiat’s home market of Italy has yet to fully rebound.

“Italy is just now entering the first stage of recovery,” Altavilla says during a business-plan review here today. “The growth pace is slower than other markets.”

FCA for the most part weathered the worst of the storm, the executive says, but the plan being implemented now is designed to increase capacity utilization, strengthen the dealer network and boost vehicle margins with more premium offerings.

Altavilla outlines several key aspects of the automaker’s EMEA strategy, including the shift toward higher-margin opportunities that exploit the brand equity of Alfa Romeo, Jeep and the Fiat 500 family.

While the automaker sets out to make its product offerings more appealing to affluent customers, Altavilla says it will maintain attractiveness to budget-minded consumers

For affluent buyers, Alfa Romeo and Jeep will lead the charge, while Fiat will be reshaped to meet both the higher-margin objective and budget-driven demand.

“To reach our target, we need to increase the presence of Alfa Romeo and Jeep,” Altavilla says. “Fiat has the emotional and functional attributes for higher-market objectives.”

The automaker says it will work to contain its leadership position in key vehicle segments, including mini cars, light-commercial vehicles and small CUVs. It also must regain leadership in the compact-car segment and make headway in the SUV market by leveraging Jeep.

In 2013, FCA’s EMEA deliveries were 1.1 million units. By 2018, the automaker has set a goal of 1.5 million deliveries in the region.

The dealer network will be resized to improve sustainability and expand market coverage, with combined Alfa Romeo and Jeep franchises a primary focus.

Fiat and Alfa Romeo dealer numbers will fall 15% by 2018, while the Jeep franchise network will expand 25%. The moves are expected to increase showroom throughput 60% on average, Altavilla says.

FCA’s EMEA manufacturing strategy includes focusing existing production capacity in Italy on higher value-added production, while at the same time significantly increasing export volumes.

Altavilla cites a Harbour analysis showing FCA’s capacity utilization in 2013 was at 66% and is forecast to exceed 100% by 2018.

“We’ve been waiting on a tailwind and the moment has come,” he says. “The EMEA region is at work, and it’s not dreams of a distant future. For us, it’s already here.”

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