Fiat may shift SUV production from Italy to North America

Article by Christian A., on September 1, 2011

Fiat S.p.A. may transfer planned production of Alfa Romeo and Jeep SUVs to North America from its oldest facility in Turin, a person familiar with the situation disclosed, adding that the company may build a small urban vehicle at the factory instead.

According to the insider who refused to be identified before an announcement is officially made, the company may manufacture a small vehicle at the Mirafiori facility after the euro gained strength against the dollar that made the possibility of building SUVs mainly destined for the U.S. a less competitive option in Europe.

However, a decision has not been made final yet, the insider source stated, says Autonews. Last November, the company disclosed to the public an investment of 1 billion euro ($1.44 billion) to make as many as 280,000 units of Alfa Romeo and Jeep vehicles at the Mirafiori plant beginning the fourth quarter of next year.

The euro has gained around 9 percent versus the dollar since then, increasing the cost of manufacturing vehicles in Europe that are meant for the U.S. market.

Analyst Marco Santino from AT Kearney commented that it makes a lot of sense from a product-mix point of view. He added that the U.S. would keep knowledge of SUV manufacturing, helping the launch of Alfa Romeo in North America.

He further explained that it would be a more competitive product because of the production costs. The automaker may talk about the compact vehicle in Turin when CEO Sergio Marchionne holds the first meeting of single management team for Chrysler and Fiat, the source mentioned. A Fiat spokesperson confirmed the meeting but refused to give comments regarding the production plan.

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