28 March 2005

Following the separation from GM, Italy’s Fiat SpA will shift its focus from making cars to manufacturing of car engines and transmissions—currently its strongest business—according to press reports.

The new Fiat’s business, Fiat Powertrain Technologies, will employ over 23,000 people to make more than 2.2 million engines and 2 million transmissions per year, and to generate an estimated €6 billion ($7.8 billion) in revenues.

The new unit will focus on the diesel engine business, which has been growing at a much faster pace than the overall new car sales. Fiat, who invented the common rail injection system in the 1990’s and then sold the license to Bosch, has considerable expertise in the diesel engine technology. Fiat Powertrain Technologies will consolidate Fiat’s diesel businesses that were scattered under Fiat Auto, Fiat Research Center, Magneti Marelli and the Iveco truck unit.

Fiat Powertrain Technologies will be also developing methane, hybrid and fuel-cell technologies.

Fiat has been posting losses due to weak car sales and overcapacity problems at its car making unit. Fiat’s share in the Italian auto market has fallen from 60% in the 1980’s to about 30% now. The formation of Fiat Powertrain Technologies is an important step in the relaunch of Fiat, which is supposed to get Fiat out of the red ink.

Source: AP