Fiat Plans New Models, Exports to Use Excess Capacity

Fiat SpA has outlined a retooled version of its restructuring program, which now focuses on introducing 17 new or revamped models most of them made in Italy by 2016.

The company's four-year business plan is based on a bleak forecast that Europe's auto sales will remain weak at least into early 2014. Fiat doesn't expect to break even in the region until 2015 for 2016.

CEO Sergio Marchionne has frequently urged European carmakers to shed excess capacity. But his new plan wouldn't close any of the company's five assembly plants in Italy. Marchionne says retooling existing facilities is the "best economic alternative" for Fiat.

The company intends to dedicate 15% of its European capacity to building six models for export by 2014, including an Italian-made small Jeep. Fiat says it expects to reach "full utilization" of its hourly and salaried workforce by 2015.

Marchionne says Fiat will focus on expanding its upscale Alfa Romeo and Maserati brands and the iconic Jeep brand marque. Alfa is slated to get nine new or revamped models by 2016 all but one of them to be built domestically. Maserati will debut six new products, including two being launched next year.

The ambitious turnaround plan will soak up Fiat's available cash, which will force the company to delay plans to increase its 58.5% Chrysler stake.

Under the terms that created post-bankruptcy Chrysler, the union-run retiree healthcare trust that owns the remaining 41.5% of the company is free to seek an initial public offering after Dec. 31. Marchionne says that possibility "doesn't concern me."

Other facets of the turnaround plan include:

Shrinking the Lancia marque to one Fiat-based model and a handful of rebadged Chrysler vehicles.

Narrowing the Fiat brand's European lineup to variants of the 500 and Panda city cars and Freemont midsize crossover vehicle.

Reducing capital spending by the Fiat-Chrysler alliance to €16 billion-€18 billion ($20.7 billion-$23.2 billion) through 2014. Fiat pledged last December to spend €20 billion ($25.8 billion) during that period on products and plants in Italy.

Lowering the production target for the two companies to between 4.6 million and 4.8 million vehicles annually by 2014, down from the previous goal of 6 million units.