Fiat Hopes Maserati and Alfa Romeo Will Save Struggling European Factories

Mar 08, 2013 11:25 AM EST | Staff Reporter

In an attempt to re-ignite Europe's stalling auto market, Fiat CEO Sergio Marchionne is hedging his bets on his company's Alfa Romeo and Maserati brands to help the automaker's money-losing European operations out of the red by 2016.

The CEO is betting millions of dollars that the underperforming sporty brands will spark a production boom at the European automaker's under-used factories and will ultimately result in increased global demand for models such as the Maserati Levante SUV, a report from AutoNews stated.

Analysts are skeptical that Marchionne's plan will succeed because of likely conflict with his mission to fully take control over Chrysler Group, the article said. Fiat currently has 58.5 percent ownership of Chrysler. Analysts say Fiat does not have the cash to buy the rest of Chrysler and also make a significant investment in reviving Alfa Romeo and Maserati.

Shrinking demand has caused Eurpoe's auto industry to struggle and many of Fiat's rivals are reportedly indicating they will cut their losses and close down the money-losing European plants.

The move comes as somewhat of a contradiction from Marchionne, who has long said that European automakers must make painful cuts in order to return to profitability. However, it has proven politically impossible for Marchionne to close Fiat's Italian plants, the report stated, and instead of accepting defeat Marchionne plants to increase production of the high-end Italian brands.

He plans to increase annual Maserati sales from last year's 6,000 to to more than 50,000 by 2015, and by 2016 he wants to triple Alfa Romeo sales to more than 300,000, the report said.

Marchionne is taking a queue from German automakers' comparative success in the high-end market. BMW, Audi and Mercedes-Benz have avoided the sales declines that have hurt other European manufactures in the past few years, mainly by increased demand for their vehicles in the U.S. and China, the article said.

"We will focus on Alfa Romeo and Maserati to access the higher end of what we consider to be a permanently polarized market now," Marchionne said last month, according to AutoNews. 

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