Fiat Reportedly Plans to Invest €9 Billion on New Models Built in Italy, Will Kill Punto

Fiat Group plans to invest as much as €9 billion ($12.3 billion) on new models to revive production in its idling Italian plants and to end European losses, according to two people familiar with the matter.

Plans include focusing the Fiat lineup on variants of the 500 and Panda small cars and boosting the Maserati and Alfa Romeo brands with new models made in Italy. In doing so, Fiat will ditch popular model lines like the Punto. The plans were disclosed to Bloomberg by two unnamed sources.

As there is no clear timeframe regarding the merger with Chrysler Group, Fiat CEO Sergio Marchionne is under pressure to cut the Italian carmaker’s losses in Europe.

Fiat will not comment on its revised European strategy until April 2014, although it has previously said it aims to develop about 20 new models for Europe by 2016, eight of which will be Alfa Romeos.

Remodeling Fiat’s lineup around the 500 and the Panda would free up resources for the brand’s upmarket shift, which has shown promising signs with Maserati. Following the addition of the mid-size Ghibli sports sedan, the luxury brand has received more than 23,000 orders this year, almost four-times its 2012 sales of 6,200 cars.

The shift in strategy also means Fiat will discontinue the Punto supermini, which will be replaced by another five-door version of the 500. That model will be built in Poland to save costs and boost profit margins. Fiat’s Italian plants will get to manufacture 500 and Jeep SUVs next year, as well as a convertible version of the Alfa Romeo 4C sports car. The new Alfa Romeo Giulia sedan will also be built in Italy from 2016 and will be targeted for export outside Europe.

By Dan Mihalascu

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