Fiat looks to Mexico for plant to feed North & South America

[nadepalma]

SOURCE: Automotive News

Fiat eyes Mexico to serve North and South America
Luca Ciferri
Automotive News
May 9, 2008 - 12:01 am ET

TURIN -- Fiat is currently eyeing Mexico as the location for a plant that would supply both North and South America, people familiar to the matter told Automotive News Europe this week.

To cope with the weak dollar, Fiat needs production in North America after its Alfa Romeo brand returns in the U.S. in late 2009.

At the same time, demand in South America is growing faster than Fiat capacity increases and the company said it needs more production for the region.

Mexico is strategically located to balance its output between Fiat's needs in North and South America.

Talking to financial analysts late last month, Fiat Group and Fiat Group Automobiles CEO Sergio Marchionne said the company needs additional capacity for South America.

"Where that capacity will come from is not yet decided. I think that it may be part of a North American solution, especially in terms of the introduction of the Alfa brand", Marchionne said.

MORE HERE

[nadepalma]

Interesting news just as Fiat is looking to re-launch Alfa Romeo in the US market.

We already know that they were talking to "US automakers" about utilizing excess plant capacity (thanks to the Euro, they are going to lose money on pretty much all their Alfa imports until they have a local plant). Not long ago, they were also talking about a possible plant in Ontario - Sergio Marchionne is Italian, but lived in Canada and the Provincial governmenet approached him on it. Recently we even heard that they may consider building products at their Case-New Holland plants in the US (C-NH is a Fiat Group subsidiary).

Mexico may be a good fit for them, and would provide one more competitor to GM, FoMoCo, and Chrysler in North America. Thankfully 2 or the 3 have gotten religion on producing good products and are making huge strides.

I wonder how much longer til Renault decides to use Nissan plants for the same purpose. Or if PSA decides to re-enter our market with Puegot? (SIDE NOTE: I saw a brand new Puegot 308 on the roads on Route 24 here in New Jersey and the same car in Springfield, NJ --- I wonder if they have an office here in NJ).

VW was talking a few years back of bringing the SEAT brand to the US since we have such a large hispanic population. It would become a "feeder" brand to VW and let them cover the lower end of the market (just as VW stupidly tries to move further and further upmarket).

Interesting to think about.

[TruckMan]

There's also the added benefit of not having to deal with the UAW if they open a plant in Mexico. With all of the recent strikes, I could see that be a consideration as well.

[geozinger]

Originally Posted by nadepalma

Interesting news just as Fiat is looking to re-launch Alfa Romeo in the US market.

We already know that they were talking to "US automakers" about utilizing excess plant capacity (thanks to the Euro, they are going to lose money on pretty much all their Alfa imports until they have a local plant). Not long ago, they were also talking about a possible plant in Ontario - Sergio Marchionne is Italian, but lived in Canada and the Provincial governmenet approached him on it. Recently we even heard that they may consider building products at their Case-New Holland plants in the US (C-NH is a Fiat Group subsidiary).

I was on a German automotive website a few days ago, and there was a banner ad for the Province of Ontario on it. My German is really rusty, but if I read it correctly, they were touting Ontario as an automotive production haven, you know, lots of capacity, engineering etc.

Originally Posted by nadepalma

Mexico may be a good fit for them, and would provide one more competitor to GM, FoMoCo, and Chrysler in North America. Thankfully 2 or the 3 have gotten religion on producing good products and are making huge strides.

Mexico seems to be a good fit for everybody these days... see my VW comment below

Originally Posted by nadepalma

I wonder how much longer til Renault decides to use Nissan plants for the same purpose. Or if PSA decides to re-enter our market with Puegot? (SIDE NOTE: I saw a brand new Puegot 308 on the roads on Route 24 here in New Jersey and the same car in Springfield, NJ --- I wonder if they have an office here in NJ).

Most all of the European manufacturers seem to have an office in New Jersey. Concerning Renault and Carols Ghosn, I have wondered the same thing myself. From what I know about Mr. Ghosn, I can't help but imagine his flagship company being absent from the largest market in the world would not be a burr in his saddle, so to speak. Nissan is in full retreat IMO, closing down their California styling studios, and with them consolidating almost all operations to Tennessee and offering buyouts to the American hourly workforce. Imagine if GM were to shutter it's operations on the western side of the US and concentrate all activities in the Detroit area. There would generate a few headlines, to say the least...

Originally Posted by nadepalma

VW was talking a few years back of bringing the SEAT brand to the US since we have such a large hispanic population. It would become a "feeder" brand to VW and let them cover the lower end of the market (just as VW stupidly tries to move further and further upmarket).

I'm still p!ssed-off about VW leaving Pennsylvania in the 1980's for Mexico. But, in some regards, it would make sense for VW to have a 'entry-level' brand. Although that seems odd, because VW (you know, the people's car) STILL has an entry level image, at least here in the US. SEAT probably would be a good fit, besides, no one here would EVER pronounce Skoda correctly...

Originally Posted by nadepalma

Interesting to think about.

Ya, but I've got to get this presentation finished!

[benroethig]

I think Puegot is much more likely to re-enter north America than Renault. Their cars are much better looking and Renaults tend to be hatches. I could see a Nissan sold version of the Master RWD though.

[nadepalma]

Originally Posted by TruckMan

There's also the added benefit of not having to deal with the UAW if they open a plant in Mexico. With all of the recent strikes, I could see that be a consideration as well.

Good point. If it were me, this would concern me as well.

[nadepalma]

Originally Posted by geozinger

I was on a German automotive website a few days ago, and there was a banner ad for the Province of Ontario on it. My German is really rusty, but if I read it correctly, they were touting Ontario as an automotive production haven, you know, lots of capacity, engineering etc.

Yup, All true. I remember there being ads they were pushing in North America stating that Ontario has more capacity than all of Michigan - an interesting turn of events for the "birthplace" of modern, mass-market automobile manufacturing. Lots of reasons why Ontario is more attractive than Michigan - and I'm sure they highlighted most of them.

Originally Posted by geozinger

Mexico seems to be a good fit for everybody these days... see my VW comment below

Including GM and others. Makes perfect sense to produce vehicles there.

Originally Posted by geozinger

Most all of the European manufacturers seem to have an office in New Jersey. Concerning Renault and Carols Ghosn, I have wondered the same thing myself. From what I know about Mr. Ghosn, I can't help but imagine his flagship company being absent from the largest market in the world would not be a burr in his saddle, so to speak. Nissan is in full retreat IMO, closing down their California styling studios, and with them consolidating almost all operations to Tennessee and offering buyouts to the American hourly workforce. Imagine if GM were to shutter it's operations on the western side of the US and concentrate all activities in the Detroit area. There would generate a few headlines, to say the least...

I know that Ferrari/Maserati and BMW are in Woodcliff Lakes, NJ. Volvo is going back to Rockleigh, NJ after PAG HQ was shuttered in Irvine, CA. Mercedes-Benz is in Montvale, NJ. Subaru has an office in Cherry Hill, NJ.

All those except for Subaru are located in Bergen County - which is right over the river from NY.

A buddy in the office saw my post and said that Puegot has an "office" in Little Falls, NJ - but who knows what they do there if there is no real outfit to run in North America...

That's an interesting point on Nissan. I wouldn't thought about it that way, but you may be right.

Originally Posted by geozinger

I'm still p!ssed-off about VW leaving Pennsylvania in the 1980's for Mexico. But, in some regards, it would make sense for VW to have a 'entry-level' brand. Although that seems odd, because VW (you know, the people's car) STILL has an entry level image, at least here in the US. SEAT probably would be a good fit, besides, no one here would EVER pronounce Skoda correctly...

I hear that. I think that we'll see them back in the US with a factory soon enough if all the articles we've been reading are correct.

SEAT would be interesting in the US market, but you are right it's a stupid move for them to introduce a brand below what has historically been known as "affordable German Engineering". Foolishness. I've read that now that Porsche is in control, they are planning on making VW more of the company it used to be. This is not only so they get more volumen but to just create better accessability. I wonder how this will affect the "market positioning" of Skoda and SEAT within the lineup?

Ya, but I've got to get this presentation finished![/quote]
Best of luck on the presentation -- get'er done! Now I've got to head back to the grind too...

[tgagneguam]

Funny, Fiat has plans to return to the US. I hear some rumblings that Peugot and perhaps Renault are interested in coming to the US market, too. Then, of course, there are several Chinese firms who plan to enter the US market.

I'm left to wonder one thing: how is it that so many people think the US market can accommodate the addition of several new automakers, yet I'm simultaneously supposed to believe that there's no room in the market for Mercury, Buick, Pontiac, and Saturn, among others?

[Cortazzo]

Originally Posted by tgagneguam

Funny, Fiat has plans to return to the US. I hear some rumblings that Peugot and perhaps Renault are interested in coming to the US market, too. Then, of course, there are several Chinese firms who plan to enter the US market.

I'm left to wonder one thing: how is it that so many people think the US market can accommodate the addition of several new automakers, yet I'm simultaneously supposed to believe that there's no room in the market for Mercury, Buick, Pontiac, and Saturn, among others?

There is plenty of room for small efficient cars that cost less than a MINI, lots of demand, not that much choice in the US market right now. I could see the fiat 500 outmini'ing the mini if it cost a little less and was produced in mexico. The SMART car is a little too small for most american's taste, but I can see truck owners buying small efficient cars that also have a premium feel as second commuter vehicles and keeping their now worthless big SUVs for weekend and vacation excursions.

[geozinger]

Originally Posted by nadepalma

Yup, All true. I remember there being ads they were pushing in North America stating that Ontario has more capacity than all of Michigan - an interesting turn of events for the "birthplace" of modern, mass-market automobile manufacturing. Lots of reasons why Ontario is more attractive than Michigan - and I'm sure they highlighted most of them.


Including GM and others. Makes perfect sense to produce vehicles there.


I know that Ferrari/Maserati and BMW are in Woodcliff Lakes, NJ. Volvo is going back to Rockleigh, NJ after PAG HQ was shuttered in Irvine, CA. Mercedes-Benz is in Montvale, NJ. Subaru has an office in Cherry Hill, NJ.

All those except for Subaru are located in Bergen County - which is right over the river from NY.

A buddy in the office saw my post and said that Puegot has an "office" in Little Falls, NJ - but who knows what they do there if there is no real outfit to run in North America...

That's an interesting point on Nissan. I wouldn't thought about it that way, but you may be right.


I hear that. I think that we'll see them back in the US with a factory soon enough if all the articles we've been reading are correct.

SEAT would be interesting in the US market, but you are right it's a stupid move for them to introduce a brand below what has historically been known as "affordable German Engineering". Foolishness. I've read that now that Porsche is in control, they are planning on making VW more of the company it used to be. This is not only so they get more volumen but to just create better accessability. I wonder how this will affect the "market positioning" of Skoda and SEAT within the lineup?

Re: Nissan.

This is where I get p!ssed off at the US automotive press (and business press, too). GM/Ford/Mopar have plenty of troubles, etc. etc., but something as (IMO) massive as Nissan's retrenchment in the US and barely a peep out of them. But Bob Lutz farts and GM is going under! Man the lifeboats! Idiots.

One of the few (and I mean few) positives for our newly weakened dollar is the fact that manufacturing will be cheaper than the Eurozone (at a minimum), but you know logistically and strategically Mexico makes more sense than any where in the continental US. It's far enough South to take advantage of the Panama Canal (and the railroads) to Central and South America, and close enough to truck product to the Southern US (their greatest growth markets currently). It works for VW, why wouldn't it work for them, too?

[benroethig]

Plus there are no import duties and labor in Mexico is much cheaper than the U.S. or Canada.

[ChevroletRevived]

Alfa Romeos are cool, I'm glad to see they'll be some more choice in the U.S market. I suspect it'll mainly take sales away from other foreign companies like M-B, BMW, etc as well. Maybe they'll bring the MiTo here, that would be really awesome. I don't see Renault coming back to the US anytime soon though. Maybe PSA, but I doubt that either. I really think to succeed in the US market you either have to be cheap and high volume or more high end and lower volume. Mid-size companies selling mid-priced products usually don't tend to do well here.

[Bravada]

1. The US market is not the "holy grail" anymore, China and India perhaps are. It won't grow as much, probably and the economic forecasts are uncertain. That said, in the short term Americans will probably warm up to smaller vehicles, putting USA more in line with the global market. This will put the market shares of "traditional" American automakers at stake (this does include the Japanese Big Three), opening up new posiblities for incomers.

2. Too bad Fiat couldn't (apparently) come to terms with any of the US automakers with excess capacity. Perhaps if they let Sergio do some clean-up in one of their factories they could steal a page from that book (and show the UAW members a plant can be kept alive and thriving if necessary changes are made).

3. Renault - the R/N problem is that they really cannot find a way to position each brand against the other, other than one is usually dominant in a given market and the other is recessive or nonexistant. For the most part, they both offer "the same", and given the lack of clear brand identities (which the similarly conditioned PSA at least managed to foster), there really isn't much reason to buy one over the other -> cannibalization. Once they sort it out, there might be a place for Renault in the US.

4. I think PSA now has some really attractive offerings, and Citroen could position themselves as a semi-luxury brand (somewhere in the area marked by Volvo, VW and Acura), Peugeot still needs to refine their position with the new 408, 508 and perhaps 608. They could also exploit their links with Mitsubishi and use their manufacturing base and dealer network. The only problem is that they consistently shun the North American market for cost-against-performance reasons, choosing to focus on developing China, Latin America and the MidEast.

5. As concerns VW, in spite of their roots, I see no point in "bringing them back". Over the years they have advanced to a rather desirable position of perhaps the only successful "midmarket" brand - i.e. one that charges more than the "mass-market", but is not as out of reach for the public as "premium" brands. Even with its high price, the Passat manages to outsell cheaper competitors in the European large family car class. For where the market is going, this is a pretty good position to start from.

6. SEAT, however, is a lost soul. It seems that GM doesn't really have a role for it - vehicles like the Scirocco, Fox or Tiguan consistently elude SEAT, which went from making "fillers" in VW lineup (i.e. cars that slotted in-between VW models, like the Ibiza/Cordoba slotted between the Polo and the Golf), through more sporty-oriented versions of GM cars (with the Toledo arguably not being much "sportier" than the Bora) to a lineup of minivanish family movers with a "twist".

I believe the only way for SEAT, other than compete directly with the sportiness-reinvigorated VW and upmarket Audi, is to move FURTHER downmarket and become VW's Dacia. Sure, VW has the Skoda, but it's no Dacia in that the cars aren't remarkably inexpensive, simple or targeted at developing markets.

Given SEAT's hispanic origin, I'd see SEAT's new role in taking over from Volkswagen in lower segments of the Latin American market. Perceived as technologically advanced in the Northern Hemisphere, VW still offers the likes of rugged Gol, Parati, Saveiro, the Kombi in South America. Moreover, they are now introducing models like the Fox (which made its way to Europe too, together with a VW badge) and the Chinese Lavita, aimed at developing markets, not so "refined" as VW's "core" offerings, but accessible and simple to build. If only SEAT could take them over and add some hispanic "flair"...




Gol



Parati



Saveiro

[gardnet1]

I see VW and Audi putting two modern-efficient-flexible plants in Southern Middle-Tennessee. One by Chattanooga and the other near Fayetteville. They will exploit cheaper labor, energy and land costs while side-stepping the unions. Education levels have improved and are about average now. The closest uaw type union activity is at Spring Hill, 50 miles NW. They can also tie into the regional supplier base that supports TN, AL, KY, GA & MS auto production. Recent roadway expansions will help too as US 64 is being upgraded to four-lane divided highway from Memphis to I-24 near Chattanooga.

The only thing remaining is for the state to pony up some relocation incentives.