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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