The decision of Fiat CEO Sergio Marchionne to freeze the launch of new vehicle models in volume segments is causing the company to lose its foothold in the European region. In the compact and subcompact segments, which are two key segments in Europe, the automaker has aging models that will not be changed soon.
One of these is the Punto subcompact, which will not have a replacement until early 2014. It was launched seven years ago. As for the Bravo compact, which was launched in 2007, the plans to replace the model were halted. Additionally, the vehicle's successor may be imported by Fiat from China. The CEO's latest product freeze was done to conserve cash in the sluggish market in Europe.
One of the reasons why this delay in product introductions will hurt the automaker is that the subcompact segment is the European region's largest market segment by volume.
It achieved 3.36 million sales in 2011, based on the data from JATO Dynamics market researchers. Another reason is the second-largest segment in Europe, the compact segment. Last year, it achieved 3.04 million sales. This segment is led by the Volkswagen Golf.
In 2011, sales of Fiat's bestseller in Europe -- the Punto -- dropped by 19.2% to 225,261 units, based on the data from JATO. The Ford Fiesta led this segment, selling 374,686 units. The aging Punto will be faced with extreme challenges, as French vehicle manufacturers launch fresh rivals this year.
Specifically, Renault will launch a new Clio in November while Peugeot will introduce its 208 in April. In 2010, Fiat announced a five-year plan which involved the replacement of the Bravo and the Punto by 2013. The introduction of the Punto successor has now been postponed until 2014. This delay has placed pressure on the automaker's Melfi facility in Italy -- the only plant producing the model.
The factory has prepared for an annual capacity of 420,000 units. However, its output was only 235,000 units last year. Company sources disclosed to Automotive News Europe that the styling for the Punto successor has already been finalized. It is now uncertain as to how the automaker will replace the vehicle.