Fiat & Ford Team-Up for new small car

[nadepalma]

I posted something about Fiat getting a new alliance partner recently here: Fiat to sign new alliance soon; launches Punto -- but this is a follow up and kind of goes with it -- just thought to put it out there for reference - Nick

Source: http://today.reuters.com/business/ne...RD-FIAT-DC.XML

Ford, Fiat to collaborate on small car
Thu Sep 8, 2005 11:36 AM ET

FRANKFURT (Reuters) - Italy's Fiat <FIA.MI> and U.S. automaker Ford Motor Co <F.N> are in advanced talks to cooperate on developing a small car, a person familiar with the matter told Reuters on Thursday, confirming an earlier report.

German newspaper Handelsblatt cited sources close to the negotiations as saying the two were holding discussions, with one source quoted as saying: "The talks are already far along."

Italy's leading auto magazine, Quattroruote, said they would collaborate on the new version of Fiat's iconic Cinquecento and Ford's tiny Ka.

Ford and Fiat, known for its small cars, did not comment.

Earlier this week, the head of the Fiat brand Luca De Meo said the new Cinquecento, due out in 2007, would probably be made on the same platform as the Fiat Panda mini.

It is due to be built in Fiat's Polish plant, where labor costs less than in Italy -- a vital saving in a segment of the market where margins are already razor thin and carmakers are teaming up to save on development costs.

The Polish plant already makes the Panda and 600 models.

REDUCE RISKS, CUT COSTS

Fiat has long said it wants to work with other carmakers on specific projects to reduce risks and cut costs, part of a plan to return to profit by 2007 from 2002's record loss.

The 106-year-old carmaker argued it had not been able to strike competitive deals when it was tied up in a partnership with General Motors <GM.N>. But that was dissolved in February and, on Tuesday, Fiat CEO Sergio Marchionne said he hoped to strike a new industrial alliance by the end of the year.

Marchionne said the new partner would not be Asian and that the alliance would not include financial stake swaps, but he declined to specify further.

Fiat already has a joint venture with France's PSA Peugeot Citroen <PEUP.PA> to make vans and together the two have a deal to make the vehicles in Turkey with carmaker Tofas <TOASO.IS>.

Fiat has also co-developed an SUV with Suzuki <7269.T>, due out at the end of the year or in early 2006.

An alliance in small cars would make sense.

Sub-compacts are still very popular in Europe and may gain more customers as fuel costs run to record highs. They have the added advantage of letting automakers bring down fleet emissions of carbon dioxide.

Competition is fierce. PSA and Japan's Toyota <7203.T> make small cars together in the Czech Republic, Volkswagen <VOWG.DE> imports its Fox model from Brazil and GM sells South Korean-made Chevrolets to serve the small end of the market.

Some analysts had thought DaimlerChrysler's <DCXGn.DE> loss-making Smart unit might be a logical partner for Fiat, but DaimlerChrysler ruled out any industrial alliance on Wednesday.

[Kennyboy]

Maybe they're zapped more money out of Ford this time, instead of GM

[nadepalma]

Up front I can see Fiat getting more out of this than Ford. But to be honest, it's true that the Ford Ka is getting old in the tooth and needs to be updated. By teaming up with Fiat, Ford gets an able partner while shielding themselves from shelling out too much cash. So I guess the partnership would seem to work. And despite people raggin' on Fiat, they are a leader and innovator in small cars -- regardless of how they execute larger cars.

Now let's see how they execute it.

BUT, I wonder who is next on the partnership list for Fiat. They said this was the first of new alliances, so I'm sure that they'll have some more partners to mention in the future. Honestly, Fiat is basically doing what PSA has done to become successful in Europe: They build diesels with Ford/PAG, they built small-micro cars with Toyota, they've built large MPVs with Fiat (Ulysse/Phedra clones), they are building a new small 4-cylinder with BMW (Bimmer will use it for the new Mini instead of the Chrysler derived engine they're currently using), and only recently agreed to 'purchase' an SUV for Europe from Mistubishi (an Outlander clone but French-ified). Since PSA is doing so well, you can see that this strategy works and enables them to get products to market faster without huge investments. A very smart move by them. I hope that Fiat can do this successfully.

[SVT2888]

Hopefully this deal comes out well for both automakers.

[Chris.Todd]

Isn't the next Corsa (Opel) being built on the same platform as the Punto?

[saturnsteve]

Originally Posted by Chris.Todd

Isn't the next Corsa (Opel) being built on the same platform as the Punto?

You said punto!

[1BadPig]

I guess Ford is trying to lose more money... they better start setting up their $2B reserve now.

[nadepalma]

Originally Posted by Chris.Todd

Isn't the next Corsa (Opel) being built on the same platform as the Punto?

Yeah, it's a platform that GM and Fiat Auto co-developed together before the 'divorce'. They both retain the rights to it, nevertheless. At least GM was smart about it this time around and kept the rights to it. They weren't so smart when they decided to drop their end of the "Premium" platform it was co-developing with Alfa and basically left to them alone. Now Alfa/Fiat/Lancia have a brand-new, flexible AWD/FWD platform to use on anything they want --- and GM doesn't even get the chance to use it.

But this new car they're talking about is much smaller than the Punto, its around the size of a Nissan Micra and current Ka. I hope it's successful since a new Cinquecento/Topolino has a much charm and charisma as the Mini.

[Timekeeper]

Originally Posted by 1BadPig

I guess Ford is trying to lose more money... they better start setting up their $2B reserve now.

Maybe Ford is hoping to get GM's $2B it gave Fiat!

[1BadPig]

FIAT must be like a drop-dead gorgeous girl, but someone we'd never dare to bring home to mother... we all want to date her and we all will eventually get burned by her.

[GM_Fanatic]

You would think other automakers would of learned from GMs mistakes.

1BadPig, I saw a sunburst orange HHR this morning on the way to work. It was behind me so I was slowing down and doing everything possible to get closer but then it turned off. It looked awesome though!

[1BadPig]

Originally Posted by GM_Fanatic

1BadPig, I saw a sunburst orange HHR this morning on the way to work. It was behind me so I was slowing down and doing everything possible to get closer but then it turned off. It looked awesome though!

It's a cool little ride. So far I am impressed with how solid the car is. I still get a lot of "What is that?!" questions. I suspect the rate these are leaving the dealers' lots in my area the question won't be heard much longer.

[SonicAerio]

That new small SUV that Fiat is doing with the Suzuki is the Aerio based one that is replacing the Aerio Sx...Suzuki is stopping production of the Sx by 2007. The Aerio Sedan is getting a full remake in 07, and the Sx is being shortened to make a sporty crossover...interiors of the 2006 Fiat seem to be identical to the 2005 Aerio.

[1BadPig]

FIAT, what a JV whore! They'll jump in bed with anybody with cash...

[LoneWolf]

Originally Posted by 1BadPig

FIAT must be like a drop-dead gorgeous girl, but someone we'd never dare to bring home to mother... we all want to date her and we all will eventually get burned by her.

I cannot believe you went there!