From: Luca Ciferri
To: Roberto Testore, Fiat Auto Managing Director
Great job! Your agreement with GM has a lot of potential. I think that Machiavelli himself would have been proud of such a deal, in which the small fish seems to have more power than the big fish.
I would love to discover how the two Paolos of Fiat Group, Fresco and Cantarella, were able to negotiate a deal where they become the largest single shareholder of GM, while Detroit gets just one fifth of Fiat Auto.
Fiat Auto perfectly matches with the 'small' General Motors. The 'big' GM is the company that sells 6 million big cars and light trucks in North America. That is the General Motors that everyone thinks of: big gas guzzlers, no diesels, big profits.
But there also is the 'small' GM, which produces 2.5 million vehicles a year in Europe and South America, where diesel engines are popular and fuel economy is a major issue. The 'small' GM is about the same size as Fiat Auto's global operations. These two partners can share costs on 5.5 million units a year.
The number itself doesn't say much, but we know that this will cut your costs $2 billion a year by 2005. If Fiat's output approaches 3 million units a year, this means your production costs will be reduced by $666 per vehicle.
I am happy that Fiat's two bright ideas - common rail diesels and modular platforms - will get a boost. A decade ago, your company invented a direct injection diesel system called common rail. Unfortunately, Fiat was too small to develop it for production and sold the patent to Bosch. Now, Fiat has developed the second generation of the common rail - called Multijet. Now that GM wants to use your diesel engines, I really hope you will exploit this innovation. It would offer a major advantage in Europe.
The same goes for your 1.2- liter common rail diesel engine. Alone, Fiat didn't have the sales volume to produce it. If the Opel Agila and Corsa share this engine, you can produce this engine profitably. Then you will have the weapons to fight the Ford-Peugeot joint venture on diesel engines.
I think it will take time to emerge publicly, but I am sure your new modular platform concept is one of the main reasons that GM sealed this deal. GM wants to derive its future small and medium-sized cars from three basic platforms, Gamma, Delta and Epsilon. Fiat's modular platform strategy would allow GM to base those cars on just two platforms, each requiring 30 percent less investment than a traditional unibody.
With a unibody, you can vary the length and wheelbase but not the width. But Fiat can vary the width of its platforms. That's why GM can use these platforms to produce its Gamma, Delta and Epsilon cars. That could mean huge savings developing future versions of the Corsa, Astra and Vectra.
OK, so Fiat gives GM its diesel engines and space frames. What does it get in return? First of all, I think Fiat could use GM's big gasoline engines. The V-8 Northstar engine would fit into the Lancia K replacement. Alfra Romeo's trio of V-6 engines is aging. Alfa could use GM's 2.5-liter and 3.0-liter V-6 engines. Perhaps with new cylinder heads designed specifically for Alfa, you can have new engines at a competitive price.
What would I would like to see as the payoff? A Fiat Auto that no longer is on the defensive, as it has been for the last decade. During the 1990s, the company only has had two major successes: the 1993 Punto and the 1997 Alfa Romeo 156. That is a sad accomplishment.
But among the latest generation of your niche cars, I only find the Alfa GTV coupe a desirable object. But it is so unpractical that I like to imagine it as a sculpture for my garden, not as a means of daily transportation. I fell in love with the EcoBasic mini. But that only is a concept; I would like to see it in the market now.
Please allow me a small suggestion: Good design is crucial for an Italian car. I want to see more stunning beauties like the Alfa 156, but not pure provocations like the Fiat Multipla. Even a well-designed car won't sell if it looks like an Italian coffee grinder. Good luck, anyway.
Luca Ciferri is a staff corespondent of Automotive News International. He is based in Turin, Italy. He can be reached at [email protected]