FIAT rethinks Russia

A mindful Marchionne

Over capacity and the worst car sales in Europe for over a decade are forcing a rethink at Fiat over its Russian strategy

 Over capacity and the worst car sales in Europe for over a decade are forcing a rethink at Fiat over its Russian strategyand the plans for building an Assembly plant in St Petersburg

said Sergey Vyazalov, the vice governor of St Petersburg city.

There has been no official contact between the regional administration in nearly 4 months and no submission of an investment plan.  Fiat had planned a 850 million-euro ($1 billion) facility with annual capacity of 120,000 units for 2013 working with both Sberbank and ZiL as the contract manufacturer.

“The company has enough capacity in Europe to deliver cars to the Russian market. So I expect it will delay the project for several years.”

said Sergey Vyazlov

Fiat  is reworking its Russian expansion strategy with its Russian partner banks, Fiat Chief Executive Officer Sergio Marchionne told reporters on Sept. 28 in Paris.“There is a boom in the market, we made the right choose to enter it with our Jeep brand” said Marchionne.

The companies problems are not in Russia but in the domestic market and mediterannean Italian car plants are running at 50 percent capacity,

New car sales in Russia grew 15 percent to 1.9 million in the first eight months of this year from the same period a year earlier, Fiat brand sales dropped 74 percent to 5,054 as the relationship with the original Russian partners Sollers came to an end.

The new Jeep strategy has been a success as the brand saw its sales triple to 2,957.

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