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Analysts: Fiat Must Cut Capacity in Europe
To balance capacity with demand, Fiat SpA needs to eliminate 700,000 units of annual capacity the equivalent of two assembly plants in Europe, says Bloomberg News.
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To balance capacity with demand, Fiat SpA needs to eliminate 700,000 units of annual capacity the equivalent of two assembly plants in Europe, says Bloomberg News.
The new service cites a Deutsche Bank analysis that warns Fiat's current strategy is unlikely to generate enough output to avoid the cuts. The carmaker aims to boost sales in Europe, use some of its Italian factories to build Jeep models for affiliate Chrysler Group and turn others into export hubs for high-end vehicles.
The bank notes that Fiat's big plant in Mirafiori is running at only 23% of its 300,000-unit annual capacity. Fiat is using less of its capacity than any other carmaker in Europe, Bloomberg says. It cites a Barclays Bank plc estimate that underutilization is costing Fiat $345 million per month.
Fiat CEO Sergio Marchionne has described the company's current overcapacity as unsustainable. But he also insists that Fiat's plan to add new models and expand annual output in Europe to 2 million units in four years from about 1.25 million currently is "not a hazardous strategy."
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