Fiat to spend big, dump the Punto & revive flagging fortunes by going upmarket

Fiat are planning to spend €9 billion over three years to push upmarket and change the Fiat lineup by dropping the Punto.

Fiat are having a very rocky ride as the Italian economy lurchges from one crisis to another. But Sergio Marchionne has a plan to put Fiat back on track.

Spending of €9 billion over the next three years is planned to revive production in Italy, rationalise the Fiat range and continue to push upmarket with Maserati and Alfa Romeo.

The Fiat plans revolve around stopping production of the Fiat Punto and replacing it with a five-door version of the trendy Fiat 500 (which will  be built in Poland to cut costs) and bolstering production and sales of the budget Fiat Panda.

The upmarket push will see Fiat building more expensive, higher margin, cars as it tries to emulate the German model of high wages/high prices as a formula for success.

That plan is already starting to work at Maserati where Fiat has managed to increase sales significantly and looks set to hit its target of 50,000 sales a year by 2015 – eight times the 2011 level – thanks to new, more appealing models like the Ghibli.

There will be further pushes upmarket with a ‘Made in Italy’ theme as Fiat introduces as many as eight new Alfa Romeo models – including an Alfa 4C Convertible and new Alfa Giulia – as well as the Maserati Levante SUV, and start to see Fiat’s big production plants get back to producing viable levels of cars once more.

Frankly, the move to make the Fiat Group a more upmarket producer of cars is the only way Fiat can survive as a manufacturer in its own, high wage, economy.

Let’s hope it works.