Fiat reportedly ready to offer Polish auto sector a rare boost

By bne IntelliNews February 12, 2013

bne -

In a rare bit of potentially good news for Poland's struggling auto sector, unconfirmed reports claim that Fiat plans to make its Tychy plant the single global production site for the next generation of Fiat 500 mini cars.

Under the plan, the Italian carmaker will switch output for the North American market to Poland from its current plant for the region in Mexico. The Polish plant is due to start turning out the new 500 in 2015, reports Automotive News Europe, citing unnamed sources.

Should the plan go forward, Fiat will increase capacity at its Tychy plant, and free capacity for core products of sister marque Chrysler in Toluca. The Italian automaker previously invested €300m for the launch of the European 500 and $550m to increase capacity to 120,000 units annually for the North American variant in Toluca.

If approved, the plan will be a huge boost for the Polish auto sector, which is largely dependent on manufacturers from Western Europe that have been hit hard by the drop in demand from the Eurozone crisis. In contrast, modern plants in next door Slovakia operated by Germany's Volkswagen and South Korea's Kia have been powering better-than-expected economic growth for the country - although that trend tailed off in the last quarter of 2012.

The Italian carmaker dropped a bomb in December when it announced plans to cut 1,500 jobs - around a third of its workforce - in Poland. The first eight months of 2012 saw a 22% fall in Polish auto production, a trend that continued through the rest of the year and worsened the sudden and sharp slowdown in the overall economy.

The Tychy plant manufactured 605,797 units in 2009, but expected only 300,000 units in 2012. Following the cutbacks, production is expected to fall to 250,000 units this year.

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