Fiat Turns to Premium Brands to Boost Results

Fiat SpA is relying heavily on its Alfa Romeo, Jeep and Maserati marques to rescue the company's ailing European operations, the Financial Times reports.

CEO Sergio Marchionne says 14 new models from the three brands will use some of Fiat's excess capacity in Italy, thus reducing manufacturing losses and helping the company avoid plant closings. But analysts tell the FT they doubt the low-volume models will cure Fiat's overcapacity problem.

Marchionne also is counting on the company's premium vehicles to boost sales in such markets as the U.S. and China. Over the next three years Fiat aims to boost Maserati volume nearly tenfold to 50,000 vehicles and expand the brand's dealer network 70% to 425 stores, the newspaper notes.

The global luxury market will grow 19% to annual volume of 3.25 million units by 2015, IHS Automotive estimates.

Premium models are the industry's most profitable, with operating margins of about 8% of revenue compared with 2% or less for mass-market models, according to the FT.