Fiat outsourcing to cheaper markets
When Fiat reorganized its divisions into independent companies, it appeared that the brands were being separated, when in fact, Fiat, Lancia and Alfa Romeo have been working closer together than ever. The so-called "separation" has also led to the centralization of certain shared operations, including design, marketing, engine development and purchasing. The latter division was reorganized at the beginning of this year, with Gianni Coda as its head. Coda has now revealed an ambitious plan to cut the company's overhead by outsourcing to "best-cost countries".
Of Fiat's €34 billion purchasing budget, components alone accounted for €25 billion last year, which is set to rise to €32 billion this year. 8% of those components were purchased from countries outside the European Union, which Coda intends to raise to 11 percent. All in all, Fiat wants to increase the €2 billion it spent last year on components from outside Europe to €3.5 billion by 2010. In return, Coda expects an 8% savings to justify the shift.
Meanwhile, Fiat Group chief Sergio Marchionne confirmed that, following Tata's purchase of Jaguar and Land Rover, his company plans to use Jaguar mechanicals to underpin Alfa Romeo's next flagship sedan, the replacement for the ageing 167. After withdrawing its interest in the Ford PAG subsidiaries, Fiat has been supporting Tata's dominant bid. In return, Tata plans to use Fiat's dealer network to bring the new Nano one-lakh budget car to Europe.
[Source: Automotive News – sub. req'd]
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Reader Comments (Page 1 of 1)
fsx 8:18PM (2/08/2008)
As always, you just refuse to get it right. It's not Alfa Romeo 167, it's 166.
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Polly Prissy Pants 9:38AM (2/09/2008)
Should I assume "best-cost countries" and "outside the European Union" are politically correct ways to say they want to buy more cheap parts from China?
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flea0 9:51AM (2/09/2008)
actually, I think they mean America. Labor costs a lot less over there, especially in the south, where Fiat has a huge presence.
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RCavaretti 10:32AM (2/09/2008)
Very interesting point. I have long thought about this. If our economy continues to get dragged down, will the US become the 'new' Third World manufacturing hub? Prices are starting to skyrocket in China. The new middle class over there is beginning to mimic our up and coming post WWII generation---more, more, more and a healthy dose of keeping up with the Jones, er, Changs. And the way the dollar sits, people from overseas are having a field day buying up stuff locally. Question is, when will this be applied to large scale manufacturing?
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Stéphane Dumas 1:29PM (2/09/2008)
I also saw this other rumor on Motor Authority, I guess, it could be a "plan b" if Fiat couldn't use the Jaguar platform
http://www.motorauthority.com/cars/alfa-romeo/alfa-romeo-could-use-cadillac-rwd-platform
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Onur 4:45AM (2/12/2008)
They cant trust chinese suppliers alone. None of the European suppliers would like to share component with Chinese since when Chinese fail, the carmakers wil push European suppliers to recover urgently and these possible sudden ups and downs will not make them feel happy...
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