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Fiat promises big bang, few bucks

October 1, 2009 5:00 AM PDT

Fiat promises big bang, few bucks

FRANKFURT--By adopting a platform strategy put to good use in Europe, Fiat says it can help Chrysler Group differentiate its three brands quickly and economically.

The group's product strategy calls for greater differentiation among Chrysler, Dodge and Jeep vehicles. About 80 percent of Chrysler Group dealers now sell all three brands.

The goal is to create distinct differences at the lowest possible cost.

Preview for analysts

Fiat-based Chrysler models are still a couple of years away. Harald Wester, Fiat's chief technical officer, this month gave a group of analysts here a detailed look at how the Italian company can help reduce the cost of launching vehicles and cut the time needed to do it.

Chrysler reorganized along brand lines after emerging from Chapter 11 in June. Fiat owns 20 percent of Chrysler.

Under Fiat's standardization approach, Wester said, only 25 to 30 percent of vehicle production costs come from components that differentiate models and brands. Those components are mainly the upper body, doors, windows, seats and interior trim, exterior trim, instrument panel and front and rear lamps. Most other costs are common among vehicles that share an architecture.

Speaking at the Deutsche Bank IAA Investor & Analyst Conference, Wester outlined how Fiat has reduced r&d and tooling costs while deriving models from the Fiat Stilo compact hatchback, which debuted in 2001.

For example, he said that when Fiat replaced the Stilo with the Bravo in 2007, the company spent just 41 percent of what it spent to develop the Stilo. The Bravo uses the Stilo's C-segment architecture but got a new upper body and interior.

In early 2010, Fiat will launch the Alfa Romeo Milano sedan based on a major upgrade of the C-segment architecture called C-Evo. The revised architecture includes new front and rear suspensions and allows for four-wheel drive. It was also designed to meet U.S. standards.

With C-Evo, Wester said, Fiat can create a new model with a new upper body and interior for half of what it cost to bring out the 2001 Stilo.

Development time slashed

He said Fiat took just 15 months to develop its two latest models, the Lancia Delta midsize hatchback and the Alfa Romeo MiTo subcompact. Both went on sale last year based on existing architectures. The development time was three months less than was needed to develop the Bravo.

Wester said the improvement came mainly from extensive use of virtual testing and validation of prototypes.

Wester also quantified the component cost savings that come from boosting volumes on existing architectures.

He said a 50 percent increase in volume compared with the original production target for an architecture results in savings of 2 to 4 percent in purchasing costs. Savings grow to 3 to 5 percent when volume increases 75 percent. And when an architecture doubles its initial target, Wester said, purchasing savings reach 5 to 8 percent.

LINK: Fiat promises big bang, few bucks | The Car Tech blog - CNET Reviews

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