TURIN - In a surprise move, Fiat Auto has chosen Magna Steyr to engineer its Stilo replacement.
It's the first time the automaker has hired a non-Italian contractor to develop a new model. Picking the Austrian company instead of a local manufacturer will cost Fiat more, but price
wasn't the sole factor driving this decision.
"We need this new car at the speed of light and Magna Steyr was the only contract engineering supplier able to guarantee the tight schedule we asked for," said Fiat group and Fiat Auto CEO Sergio Marchionne.
The lower-medium Stilo is Fiat's third-best-selling model, the success of its replacement is crucial to Fiat's recovery.
Marchionne wants production of the new Stilo to start by the end of 2006, with sales beginning by summer 2007 at the latest.
That means a time to market of 20 months. By comparison, best-practice competitors need more than two years to do the same.
The reason for the rush is that previous Fiat regimes delayed development of the Stilo replacement by twice rejecting designs. The final design was signed off in April.
Marchionne, who became Fiat Auto's CEO in February, wants the new model developed quickly because the current Stilo is selling well below its target.
Fiat introduced the current Stilo in September 2001 with a 400,000 units-a-year sales target. Last year Fiat built 108,778 Stilos.
The Italian carmaker hopes to sell 120,000-150,000 units a year of the next Stilo, supplier sources say.
For its new Croma upper-medium car, Fiat subcontracted engineering to Italdesign Giugiaro. Engineering company Stola developed the 159 lower-premium car for Fiat brand Alfa Romeo.
Industry sources say Graz-based Magna Steyr charges 20 percent to 40 percent more for its engineering services than Italian competitors.