Fiat in Europe
Fiat, an Italian car manufacture, headquartered in Turin and operated by the Agnelli family, has been a major force in Italian economic life since the beginning of the 20th century. FIAT is mainly involved in the production of Fiat cars and has a number of plants in Italy and abroad. It also owns Alfa-Romeo, Lancia, and Ferrari. FIAT's combined operations produce 3 million cars per year in Italy. FIAT's large share of the Italian market allows it to compete in the European market. Fiat Auto is the world's sixth-largest automobile producer (with 5% of the global market) and the seventh largest at European level (with 9.2% of the market). Fiat not only developed in automobile market but also involved in commercial vehicles, construction machinery, telecommunications equipment, engine components, railroad stock, tractors, and airplanes. Please refer to Appendix A.
Fiat was successfully operated in Italy. The government also supported Fiat to become the top carmaker in the country. Although Italian prefers its home-made car, however, Fiat faced big challenge out of Italy. People in Europe regarded Fiat as innovative and diversity company. Due to cooperate with CRF, Fiat’s strong R&D makes it has capability to compete with other company in Europe. The innovative of Fiat’s product line such as Fiat 500 C with electrical control soft top brings competitive advantage for Fiat to compete with other car companies. However, the lack of scale compared to peers limited Fiat’s financial efficiency. In addition, Fiat used to produce innovative car, but they don’t have sensitivity of the market. Marketing seems don’t know what happen around the market and what’s customer want now. The lack of ability to understand the market is the big problem of Fiat. In addition, there are no partnership between marketing and engineer. The result is marketing can’t provide value information to engineer, and the car somehow just copy its competitors, but with low price. This weakness influences not only the relationship between Fiat and its customer but also hurts brand equity. Furthermore, it is hard to distinguish what is Fiat’s segmentation. Because Fiat owns too much car brand, and developed so many models. However, Fiat’s model is too similar to its competitors, the consequence is customer doesn’t recognize the car and the target market is overlap to each other. Fiat’s management culture doesn’t efficiency in the market. The manager focus too much on “mature market”. They outweigh discount, service than innovation and quality. This is another big problem of Fiat. Moreover, in the commercial, Fiat doesn’t create an attractive one but emphasized on price cut, which bring “cheap and low quality” image to audience.
Fiat also has several brands such as Alfa Romeo and Lancia. Both brands are well recognized in the European market. Alfa Romeo is a well-defined sports car and Lancia remains synonymous of elegance. Fiat can benefit from the both brand’s strong recognized and improve Fiat’s brand image and competitive advantage in European market. However, in 1987, under Fiat’s operation, the first Alfa Romeo- 164 appear in the market. The 164 sold well in Italy, but sales in elsewhere were disappointing. The dismal sales performance of the 164 was the first time that Fiat and Alfa Romeo faced the challenge. The low sales continued to early 1990s. By 1993, the number of car made under Alfa Romeo name had roughly 100,000 sales, it was slightly lower than the slaes before Fiat takeover. Fiat also owes Ferrari which famous by its high quality engine and sports car. High quality is perceived by customers on the base of what they need. Although Ferrari and Fiat didn’t share their engineer department, the image of Ferrari somehow increases the confidence for customer to buy Fiat. In addition, Ferrari and Maserati both helped Fiat open US market. Maserati’s innovation and creative skills are highly well known in global. The addition of...
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