NF500 / fiat spa

Fiat SpA’s share of the rapidly growing Italian market for new cars fell in July compared to June, as the revitalised automaker lost ground on European and U.S. competitors. This is according to figures from Italy’s Transport Ministry released this Wednesday.

In its monthly review of car data, the ministry said Fiat, Europe’s fifth-biggest car maker by volume, registered a total of 30.5% of all Italian new cars last month for all its mass-market car brands, including Alfa Romeo and Lancia. This is down from June’s 31.7% market share, but still a healthy 10.1% higher than the equivalent month of 2006.

These figures come as no surprise as Fiat’s own product range begins to mature and new models are brought to market by competing manufacturers.

Late in January the company, regarded as a specialist in small cars, launched the Bravo, its first major new model in 17 months. The Bravo is positioned in a segment of the market in which Fiat has struggled in the past.

July, of course, saw the launch of the new Fiat 500.

In a statement issued as a response to these latest figures, Fiat said on Wednesday they had received more than 60,000 orders for the new Fiat 500 in less than a month. The vast majority of these orders are from home market customers.

Overall, the number of new cars registered in Italy, overwhelmingly Fiat’s biggest market, rose in July to 211,475 from 192,083 in the same month a year earlier.

Sales of Fiat’s eponymous brand fell to 23.2% of all new cars registered in July from 24.1% a month earlier.

Fiat SpA CEO Sergio Marchionne has announced that orders for the new Fiat 500 had exceeded 57,000, a mere 20 days after it’s official launch even on 4th July.

During a broad ranging conference call held after Fiat reported that second-quarter net profit more than doubled, Marchionne said Fiat has an official target of selling up to 60,000 of the new 500 model in the calendar year 2007, and sounded buoyed by the early demand for Fiat’s new baby;

We’ve had an incredible response to the 500, both in Italy and elsewhere.

Marchionne also said the Polish plant where Fiat is making the 500 currently has capacity to produce 120,000 vehicles a year, but reiterated earlier statements from inside Fiat by saying that;

I hope that some recent efforts we’ve made to cut out bottlenecks can help raise output to about 140,000 a year.

The Fiat boss stated he was confident that operating margins for the car wouldn’t be negatively affected by ongoing wage negotiations with a labour union at the Polish plant where the baby Fiat is produced.

Acknowledging the plant’s central role in Fiat’s plans, the NSZZ Solidarnosc union is seeking a 100% increase in the basic monthly starting salary at the plant, and has threatened to organize strike action for September to press home its claim if negotiations fail to produce progress.

I’m not going to comment on wage increases. We will respond to the unions. We think we have ways to mitigate any extra costs that might arise. It shouldn’t impact profitability.

Said Marchionne.

Making the car in Poland’s low labour-cost economy allows Fiat to make more profit on the car than would be possible if it were produced Western Europe. During early negotiations with the Polish union held last week, Fiat agreed to pay workers new bonuses equalling close to €1m as it seeks to head off the risk of disruption.

It will certainly be interesting to see how Fiat manage both the wage negotiations and production capacity in the coming months.  Production in particular is an interesting dilemma, we already know Fiat plan to produce soft top and Abarth versions of the new Fiat 500, with talks of a Station Wagon and/or SUV being considered too.  These extra vehicles will surely generate more demand and interest, further testing Fiat’s ability to juggle supply and demand for a premium “tailored to suit” vehicle.